Frederic Chopin Corporation is preparing its December 31, 2014, balance sheet. T

Question

Frederic Chopin Corporation is preparing its December 31, 2014, balance sheet. The following items may be reported as either a current or long-term liability On December 15, 2014, Chopin declared a cash dividend of $3.75 per share to stockholders of record on December 31. The dividend is payable on January 15, 2015. Chopin has issued 1,000,000 shares of common stock, of which 50,000 shares are held in treasury. At December 31, bonds payable of $116,120,000 are outstanding. The bonds pay 12% interest every September 30 and mature in installments of $29,592,000 every September 30, beginning September 30, 2015. At December 31, 2013, customer advances were $14,250,000. During 2014, Chopin collected $31, 247,000 of customer advances; advances of $26,546,000 should be recognized in income. For each item above, indicate the dollar amounts to be reported as a current liability and as a long-term liability, if any.

Explanation / Answer

Current Liability Dividend Payable 187500 [50000*3.75] No dividend is paid on shares kept with treasury Bond Payable Current Liability: $29,592,000 Instt payable within 1 yr from 31.12.2014 Long Term Liability: Installment other than current Liability i.e,$86528000 Interest Payable 3483600 [116120000*12%*3/12] Customer Advance as on Dec 14 Customer Advance during Dec 14 31247000 Add: Customer Advances on Dec 13 14250000 Less: Customer Adv recognised a income -26546000 Customer Adv [ Current Liability] 18951000

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