Following are six pertinent facts about events during the current year at Shulton, Inc. a. On September
Question:
Following are six pertinent facts about events during the current year at Shulton, Inc.
a. On September 30, Shulton signed a six-month, 9-percent note payable to purchase equipment costing \(\$ 50,000\). The note requires payment of principal and interest at maturity.
b. On September 30 , Shulton discounted a \(\$ 50,000\) note payable to Lake Air National Bank. The interest rate on the one-year note is 8 percent.
c. On November 30, Shulton received rent of \(\$ 5,100\) in advance for a lease on a building. This rent will be earned evenly over three months.
d. December sales totaled \(\$ 38,000\), and Shulton collected an additional state sales tax of 7 percent. This amount will be sent to the state of Arizona early in January.
e. Shulton owes \(\$ 100,000\) on a long-term note payable. At December 31, 6-percent interest since July 31 and \(\$ 20,000\) of this principal are payable within one year.
f. Sales of \(\$ 430,000\) were covered by Shulton's product warranty. At January 1, estimated warranty payable was \(\$ 8,100\). During the year, Shulton recorded warranty expense of \(\$ 22,300\) and paid warranty claims of \(\$ 23,600\).
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For each item, indicate the account and the related amount to be reported as a current liability on Shulton's December 31 balance sheet.
Step by Step Answer:
Financial Accounting
ISBN: 9780133118209
2nd Edition
Authors: Charles T. Horngren, Jr. Harrison, Walter T.