tb problem qu. 11-226 (algo) classifying liabilities\nfor each item determine whether it is reported as a…

tb problem qu. 11-226 (algo) classifying liabilities\nfor each item determine whether it is reported as a current liability, long - term liability, or not a liability, on the balance sheet of a company with a one - year operating cycle.\nitem classification\n1. employee union dues payable\n2. wages payable.\n3. employee federal income taxes payable\n4. unearned revenues (to be earned over next 3 months)\n5. accounts receivable.\n6. salaries payable.\n7. accounts payable (due in 30 days)\n8. bonds payable (due in 9 months)\n9. notes payable (mature in five years)\n10. notes payable (due in 200 days)

tb problem qu. 11-226 (algo) classifying liabilities\nfor each item determine whether it is reported as a current liability, long - term liability, or not a liability, on the balance sheet of a company with a one - year operating cycle.\nitem classification\n1. employee union dues payable\n2. wages payable.\n3. employee federal income taxes payable\n4. unearned revenues (to be earned over next 3 months)\n5. accounts receivable.\n6. salaries payable.\n7. accounts payable (due in 30 days)\n8. bonds payable (due in 9 months)\n9. notes payable (mature in five years)\n10. notes payable (due in 200 days)

Answer

Explanation:

Step1: Recall liability classification rules

Current liabilities are due within one - year operating cycle. Long - term liabilities are due after the operating cycle. Non - liabilities are not obligations.

Step2: Classify Employee Union Dues Payable

It is due in the normal course of business within the operating cycle, so it's a current liability.

Step3: Classify Wages payable

Wages are typically paid within the operating cycle, so it's a current liability.

Step4: Classify Employee Federal Income Taxes Payable

These are usually paid within the operating cycle, so it's a current liability.

Step5: Classify Unearned revenues (to be earned over next 3 months)

Since it will be earned within the operating cycle, it's a current liability.

Step6: Classify Accounts receivable

It is an asset, not a liability.

Step7: Classify Salaries payable

Salaries are paid within the operating cycle, so it's a current liability.

Step8: Classify Accounts payable (due in 30 days)

It is due within the operating cycle, so it's a current liability.

Step9: Classify Bonds payable (due in 9 months)

It is due within the operating cycle, so it's a current liability.

Step10: Classify Notes payable (mature in five years)

It is due after the operating cycle, so it's a long - term liability.

Step11: Classify Notes payable (due in 200 days)

It is due within the operating cycle, so it's a current liability.

Answer:

  1. Current liability
  2. Current liability
  3. Current liability
  4. Current liability
  5. Not a liability
  6. Current liability
  7. Current liability
  8. Current liability
  9. Long - term liability
  10. Current liability