Accounting for several current and long-term liabilities (Learning Objectives 2, 3, & 5) 20–25 min.

Following are pertinent facts about events during the current year at Zepher Snowboards.

a. December sales totaled $404,000, and Zepher collected sales tax of 7%. The sales tax will be sent to the state of Washington early in January.

b. Zepher owes $80,000 on a long-term note payable. At December 31, 6% interest for the year plus $20,000 of principal are payable within one year.

c. On August 31, Zepher signed a six-month, 7% note payable to purchase a machine costing $60,000. The note requires payment of principal and interest at maturity.

d. Sales of $997,000 were covered by the Zepher product warranty. At January 1, estimated warranty payable was $11,700. During the year, Zepher recorded warranty expense of $27,500 and paid warranty claims of $30,300.

e. On October 31, Zepher received cash of $5,232 in advance for the rent on a building.

This rent will be earned evenly over six months.

Requirement 1. For each item, indicate the account and the related amount to be reported as a current liability on Zepher’s December 31 balance sheet.

AppendixLO1