1

As the accountant for G. Scott Company, how would you report the following debt obligations on the companys statement of financial position on December 31, 2018?

a) The company has a debt obligation that matures on December 31, 2022. The debt is callable by the lender at any time. (1 mark)

b) G. Scott has a long term obligation of $1,000,000 which is maturing over 5 years in the amount of $200,000 per year. The obligation is dated November 1, 2018 and the first maturity date is November 1, 2019. (1 mark)

2

The Environmental Protection Agency on August 1, 2018, identified Rizden Pesticides Ltd. has being potentially responsible for damages to the environment. The companys management and counsel have concluded that it is probable that Rizden will be responsible for damages in a reasonably estimated amount of $20,000,000. Rizden has an insurance policy of $30,000,000 with a deductible clause of $400,000. As the companys accountant, how would you report this information in its financial statements at December 31, 2018? (2 marks)

3

On October 1, 2018, Slipper's Corporation borrowed $50,000 by signing a note valued at $50,000 with an interest rate of 7%, which matures in 9 months. Prepare the following entries for the company:

1. October 1, 2018 entry. (1 marks)

ii) December 31, 2018, annual adjusting entry. (2 marks)

iii)July 1, 2019 entry. (3 marks)