The following transactions occurred in Wendell Corporation, which has a December 31 year end.
1. Property taxes of $40,000 were assessed on March 1 for the calendar year. They are payable by May 1.
2. Wendell signed a five-year, 7%, $200,000 installment note payable on July 1. The note requires fixed principal payments of $40,000, plus interest annually on each June 30 for the next five years.
3. Wendell purchased inventory for $120,000 on December 23 on account, terms n/30, FOB shipping point. The inventory was shipped on December 28 and received by Wendell on January 2.
4. Wendell received $10,000 from customers on December 21 for services to be performed in January.
5. On December 31, Wendell sold inventory for $8,000, plus 13% HST. The cost of goods sold was $5,000. The company uses a perpetual inventory system.
6. Weekly salaries of $18,000 are paid every Friday for a five-day workweek (Monday to Friday). This year, December 31 is a Monday. Payroll deductions for the one day of pay before the end of the year include CPP of $175, EI of $68, and employee income tax of $1,200. Employee benefits to be paid by the employer include CPP of $175 and EI of $95. Payroll deductions will be paid on January 15.
7. Wendell, which reports under IFRS, is the defendant in a negligence lawsuit. Wendell's legal counsel estimates that Wendell may suffer a $75,000 loss if it loses the suit. In legal counsel's opinion, however, it cannot be determined at this time whether or not the case will be lost.
8. After the preparation of its corporate income tax return at year end, Wendell determined that total corporate income tax payable for the year was $50,000 but $45,000 of this amount was paid during the year when the company paid tax installments.
9. Wendell reported non-current debt of $250,000 at December 31, of which $30,000 was due within the next year.
10. Wendell has a $100,000 operating line of credit available, on which no funds have yet been drawn.
Instructions
(a) Identify which of the above transactions gave rise to amounts that should be reported in the current liabilities section or the non-current liabilities section of Wendell's statement of financial position as at December 31. Identify the account title(s) and amount(s) for each reported liability.
(b) Indicate any information that should be disclosed in the notes to Wendell's financial statements.