Question

Norma Smith is the controller of Ayayai Corporation and is responsible for the preparation of the year-end financial statements.

For each of the following transactions that occurred during the year, indicate the dollar amount to be reported as a current liability as of December 31, 2020. (Enter 0 for amounts if no current liability is to be reported. Do not leave any answer field blank.)

						Reported as
(a)		On December 20, 2020, a former employee filed a legal action against Ayayai for $101,980 for wrongful dismissal. Management believes the action to be frivolous and without merit. The likelihood of payment to the employee is remote.		$		Current LiabilityNot a Current Liability
(b)		Bonuses to key employees based on net income for 2020 are estimated to be $169,300.		$		Not a Current LiabilityCurrent Liability
(c)		On December 1, 2020, the company borrowed $876,000 at 8% per year. Interest is paid quarterly.		$		Current LiabilityNot a Current Liability
(d)		Accounts receivable at December 31, 2020, is $10,230,800. An aging analysis indicates that Ayayai’s expense provision for doubtful accounts is estimated to be 3% of the receivables balance.		$		Not a Current LiabilityCurrent Liability
(e)		On December 15, 2020, the company declared a $2.30 per share dividend on the 40,120 shares of common stock outstanding, to be paid on January 5, 2021.		$		Current LiabilityNot a Current Liability
(f)		During the year, customer advances of $200,700 were received; $56,300 of this amount was earned by December 31, 2020.		$		Not a Current LiabilityCurrent Liability

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Answer 1

Answer
		Reported as	Note:
(a)	$                -	Not a current liability
(b)	$      169,300	Current liability
( c)	$          5,840	Current liability	876,000*8%*1/12
(d)	$                -	Not a current liability
( e)	$        92,276	Current liability	40,120*$2.3
(f)	$      144,400	Current liability	$200,700-$56,300