For each of the situations that follow, determine whether a liability should be reported on the balance sheet. If a liability should be reported, suggest an account name and indicate whether it should be reported as a current liability or as a long-term liability. If no liability should be reported, indicate why.
a. The last installment payment on a three-year note payable is due next month.
b. Specialized production machinery has been acquired under a capital lease.
c. A $14 million lawsuit has been filed by a customer who claims injury from one of the company’s products.
d. The labor services of employees have been consumed but not paid for yet. Payment is not anticipated until the next regular payday in two weeks.
e. A 20-year issue of bonds has been outstanding for 19 years and is expected to be repaid in cash at its maturity date.
f. The company has signed a contract promising to buy $600,000 worth of merchandise during the coming year.