In this simulation, you are asked to address questions related to the accounting for current liabilities. Prepare responses to allparts.

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KWW Professional_Simulation Time Remaining O hour 20 minutes Current Liabilities Unspit Split Horiz Spit Vertical Spreadsheet Calculator Exit Situation Journal Entries Explanation Directions Resources Alex Rodriguez Inc., a publishing company, is preparing its December 31, 2012, financial statements and must determine the proper accounting treatment for the following situations. (a) Rodriguez sells subscriptions to several magazines for a 1-year, 2-year, or 3-year period. Cash receipts from subscribers are credited to magazine subscriptions collected in advance, and this account had a balance of $2,300,000 at December 31, 2012. Outstanding subscriptions at December 31, 2012, expire as follows. During 2013-$600,000 During 2014– 500,000 During 2015- 800,000 (b) On January 2, 2012, Rodriguez discontinued collision, fire, and theft coverage on its delivery vehicles and became self-insured for these risks. Actual losses of $50,000 during 2012 were charged to delivery expense. The 2011 premium for the discontinued coverage amounted to $80,00, and the controller wants to set up a reserve for self-insurance by a debit to delivery expense of $30,000 and a credit to the reserve for self-insurance of $30,000. (c) A suit for breach of contract seeking damages of $1,000,000 was filed by an author against Rodriguez on July 1, 2012. The company's legal counsel believes that an unfavorable outcome is probable. A reasonable estimate of the court's award to the plaintiff is in the range between $300,000 and $700,000. No amount within this range is a better estimate of potential damages than any other amount. (d) The following items are listed as liabilities on the balance sheet on December 31, 2012. $ 420,000 750,000 2,250,000 Accounts payable Notes payable Bonds payable The accounts payable represent obligations to suppliers that were due in January 2013. The notes payable mature on various dates during 2013. The bonds payable mature on July 1, 2013. Explanation Directions Situation Journal Entries Resources For situations (a), (b), and (c), prepare the journal entry that should be recorded as of December 31, 2012. Journal Entries Directions Situation Explanation Resources Prepare a brief memorandum explaining the general rule for classifying a liability as current or noncurrent. Explain the conditions under which notes payable might be classified as current or noncurrent.