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
