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The following information pertains to Carson Corp. as of December 31, year 8: Dividends in arrears...

The following information pertains to Carson Corp. as of December 31, year 8:

Dividends in arrears on cumulative preferred stock: $15,000

year 8 dividends on preferred stock, will be declared in January year 9: $20,000

year 8 dividends on common stock, will be declared in January year 9: $40,000

CEO bonus for year 8, will be paid in February year 9: $30,000

What amount should Carson report as current liabilities on its balance sheet at December 31, year 8?

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Answer #1

Amount should be reported as current liabilities on Carson balance sheet at December 31 year 8 will be $30000.

Explanation:

CEO bonus has been ascertain and not paid till December 31 , so only CEO bonus will be reported as current liabilities amouunted to $30000.

Dividend has not been declared in year 8 , so no any event occurred related to Dividend Arrear and Dividend payable in year 8.

When Dividend will be declare in year 9 then in that particular year it will be shown under liabilities side of balance sheet.

Conclusion: Therefore only CEO bonus will be shown under current liabilities of Carson balance sheet in year 8.

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