Question

The following list of items appear on the balance sheet of Crunched Auto Body Repair Shop, which has a 12-month operating cycle. Identify the proper classification of each item. In the space beside each item write a C if it is a current liability, an L if it is a non-current liability, or an N if it is not a liability.

	a.	Wages payable.
	b.	Notes payable in 60 days.
	c.	Mortgage payable (payments due in the next 12 months).
	d.	Notes receivable in 90 days.
	e.	Note payable (matures in 5 years).
	f.	Mortgage payable (payments due after the next 12 months).
	g.	Notes payable due in 18 months.
	h.	Income taxes payable.
	i.	Estimated warranty liability.
	j.	Allowance for doubtful accounts.

Answer 1

a. Wages payable - C (Current liability)

b. Notes payable in 60 days - C (Current liability)

c. Mortgage payable (payments due in the next 12 months) - C (Current liability)

d. Notes receivable in 90 days - N (Not a liability)

e. Note payable (matures in 5 years) - L (Non current liability)

f. Mortgage payable (payments due after the next 12 months) - L (Non current liability)

g. Notes payable due in 18 months - L (Non current liability)

h. Income taxes payable - C (Current liability)

i. Estimated warranty liability - C (Current liability)

j. Allowance for doubtful accounts - N (Not a liability)