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 | |||
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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