Given: DIOMEDIC Inc. produces armored cable devices under the Bellerephon trademark for US domestic customers. The company is an unlisted, middle-market business that operates out of a single facility in Glaucus, NY. You are a staff accountant at Ilium, LLP, assigned to the firms Outsourced Services division. H. Berlioz, your boss, has instructed you to review the Current Liabilities section of the DIOMEDIC Trial Balance and explain any corrections or changes that need to be made. The trial balance has been prepared by a bookkeeper who has a general knowledge of common entries, but she is not a trained accountant.

During the course of your review, you have learned the following:

1. a) On Nov 12, 2020 DIOMEDIC entered into a $46,800 contract with Starret Machinery, Inc. for equipment that Starret would produce to the customers specifications. The contract would obligate DIOMEDIC for the full contract amount upon acceptance and approval, which both parties anticipated would occur in Q1 2021. Fran Jaruzelski, the DIOMEDIC bookkeeper, had posted a debit entry to AP for the 10.0% deposit required by the contract.

2. b) On December 28, 2020 DIOMEDIC had placed an order with Homeric Supply (HS) for $1,700 of RM to be shipped f.o.b. HS on December 30, 2020.

3. c) All of DIOMEDICs sales are subject to an 8.0% sales tax, and the company collects the sales tax and remits this to the taxing authorities on a quarterly basis, within ten days after the end of the quarter. The Sep 31, 2020 balance of Sales Tax Payable was paid on October 8, 2020. As of December 31, 2020, DIOMEDIC had collected 93.5% of its 4Q Sales.

4. d) DIOMEDIC issued the zero-interest-bearing note to Retsof Advance Funding on Nov 2, 2020 receiving $28,400 cash and agreeing to repay the face amount of the $30,000 note on Feb 28, 2021.

5. e) On January 16, 2015 DIOMEDIC borrowed $250,000 from Bronze Bear Lending (BBL). The note had a ten-year maturity and required payments of 4.7% simple interest and a pro-rata reduction of principal on each anniversary. The note contained an acceleration clause, under which DIOMEDIC was required to maintain a Current Ratio of at least 1.4 at each year-end. Since the note had been issued with a ten- year life, Jaruzelski had classified all accounts associated with it as noncurrent.

6. f) DIOMEDIC employees work a standard number of hours each week, and the pay period runs on a two- week cycle from Monday to the following Friday, with settlement occurring on the next following Thursday. The last pay period in 2019 occurred on December 23. The total payroll expense is $11,800 per week, and employees are paid for all Federal holidays.

Jaruzelski has provided the following table of all non-zero Working Capital account balances from her TB:

A/P $12400 Inventory 31600

A/R 23462.57 Other current assets 18200.20

Accrued Expenses 7346.25 RAF Not/ P(net) 28400

Cash 10800.65

Required: Giving effect to the items noted above, prepare the Current Liabilities section of DIOMEDICs Balance Sheet. Explain each adjustment that you made, and set forth any questions that you were not able to resolve. Include with each such unresolved question an analysis of why you were not able to find an answer to the question.