Assume that Dunlop Sporting (roods completed these selected transactions during December 19X6:

a. Sport Spectrum, a chain of sporting goods stores, ordered \(\$ 40,000\) of tennis and golf equipment. With its order, Sport Spectrum sent a check for \(\$ 40,000\). Dunlop will ship the goods on January 3, 19X7.

b. The December payroll of \(\$ 195,000\) is subject to employee withheld income tax of 9 percent, FICA tax of 8 percent (employee and employer), state unemployment tax of 5.4 percent, and federal unemployment tax of 0.8 percent. On December 31 , Dunlop pays employees but accrues all tax amounts.

c. Sales of \(\$ 2,000,000\) are subject to estimated warranty cost of 1.4 percent.

d. On December 2, Dunlop signed a \(\$ 100,000\) note payable that requires annual payments of \(\$ 20,000\) plus 9-percent interest on the unpaid balance each December 2.

\section*{Required}

Classify each liability, and report the amount that would appear for these items on Dunlop's balance sheet at December 31, 19X6.

\section*{CHALLENGE EXERCISES}