Problem 7-29A Current Liabilities

Problem 7-29A: Current Liabilities

Student’s Name

Institution Affiliation

Course Name and Code

Professor’s Name

Date

Problem 7-29A: Current Liabilities

1) The Amount of Cash that Ripley Paid for Interest during Year 1

Interest=Principal * Rate* Term Principal

=$70,000*0.06*4/12

=$1,400

2) The Amount of Interest Expense Reported on Ripley’s Income Statement for Year 1

Interest=Principal * Rate* Term Principal

=20,000*0.06*2/12

=$200

Total Interest =$1,400+$200

=$1,600

3) Amount of Warranty Expenses for Year 1

Estimated Warranty Expense (EWE)= Sales*1%

EWE=240,000*1%

=$2,400

Current Liabilities Section of the Balance Sheet as at December 31, Year 1

Interest Payable=20,000*0.06*2/12

=$200

Sales Tax Payable=Total Taxable Income* Rate

$240000 x 7% =$16800

$210000 x 7% = $14700

=$16800-$14700

=$2,100

Warranty Payable

EWE= Sales*1%

=$240,000 x 1%

= $2,400

$2,400-$2,100

=$300

Notes Payables

=$70,000-$70,000+$20,000

=$20,000

TOTALS ($)

Interest Payable 200

Notes Payable 20,000

Warranty Payable 300

Tax Payable -527362593062,100

Total Current Liabilities 22,600

30057509706129785895146600

Effect of Transactions on the Balance Sheet at December 31, Year 1

Balance Sheet Income Statement Statement of Cash Flows

Transactions Assets= Liabilities + Equity Rev.- Exp. = Net Inc. 1. + + NA NA NA NA +FA

2. + + + + + +OA

3. NA + – NA + – NA

4. – – NA NA NA NA -OA

5. – – – NA – – -FA, OA

6. + + NA NA NA NA +FA

7. – – NA NA NA NA -OA

8. NA NA NA NA NA NA NA