Question

Norma Smith is the controller of Ayayai Corporation and is responsible for the preparation of the...

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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Homework Answers

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
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