Financial Statement Presentation of Liabilities As of December 31 of the current

Question

Financial Statement Presentation of Liabilities As of December 31 of the current year, Petersen Corporation has prepared the following information regarding its liabilities and other obligations Notes payable, of which $12,000 will be repaid within Interest expense that will result from existing liabilities over Lawsuit pending against Petersen, in which $600,000 is claimed in damages. Legal counsel can make no reasonable estimate of the company's ultimate liability at this time . . .. . .. . . . . .. . . 600,000 amount will be repaid from a bond sinking fund..... . . . . . .. . . . . . .. .. 900,000 sheet date . 20-year bond issue that matures in two years. The entire Accrued interest on the 20-year bond issue as of the balance Three-year commitment to John Hoskins as chief financial Note payable due within 90 days (but that is approved to Cash deposits from customers for goods and services to Income taxes, of which $100,000 are currently payable .. 36,000 be delivered over the next nine months. 300,000 . . . .. . . .. . .. . . .. . . .. .. and the remainder deferred indefinitely 185,000 . . . . Instructions a. Prepare a listing of the Petersen Corporation's current and long-term liabilities as they should be presented in the company's December 31 balance sheet. b. Briefly explain why you have excluded any of the listed items in your listing of current and long-term liabilities

Explanation / Answer

Solution:

a) Preparing a Listing of the Peterson Corporation's Current Liabilities and Long term Liabilities as they Should be Presented in the Comapny's December 31, Balance Sheet:

b) Brefily Explaning why other Excluded of the Listed Items in the Listing of the Current and Long Term Liabilities:

Petersen Corporation Liabilties Amount ($) Current Liabilities: Current Portion of Long Term Debt Notes Payable $12,000 Accrued Interest $36,000 Unearned Revenue $300,000 Income Tax Payable $100,000 Total Current Liabilities $448,000 Long Term Liabilities: Notes Payable $68,000 Bonds Payable $900,000 Notes Payable $75,000 Deferred Income Tax $85,000 Total Long Term Liabilities $1,128,000 Total Liabilities $1,576,000

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