Larkin Online Company has the following liability accounts after posting adjusting entries: Accounts Payable $63,000, Unearned Ticket Revenue $24,000, Estimated Warranty Liability $18,000, Interest Payable $8,000, Mortgage Payable $120,000, Notes Payable $80,000, and Sales Taxes Payable $10,000.Assume the company’s operating cycle is less than 1 year, ticket revenue will be earned within 1 year, warranty costs are expected to be incurred within 1 year, and the notes mature in 3 years.
Instructions
(a) Prepare the current liabilities section of the balance sheet, assuming $40,000 of the mortgage is payable next year.
(b) Comment on Larkin Online Company’s liquidity, assuming total current assets are $300,000.