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Chapter 12: Q28E (page 661)

Reporting liabilities

At December 31, MediStat Precision Instruments owes \(52,000 on Accounts

Payable, Salaries Payable of \)12,000, and Income Tax Payable of \(10,000. MediStat

also has \)300,000 of Bonds Payable that were issued at face value that require

payment of a \(35,000 installment next year and the remainder in later years. The

bonds payable require an annual interest payment of \)4,000, and MediStat still

owes this interest for the current year. Report MediStat’s liabilities on its classified

balance sheet on December 31, 2018.

Short Answer

Expert verified

The total liabilities of the company are $378,000.

Step by step solution

01

Definition of current liabilities

The current liabilities are type of the liabilities which become due after the period of the 12 months or operating cycle.

02

Calculation of the total liabilities

Medi Stat Precision

Balance Sheet

At December 31

Current Liabilities:

Accounts Payable

$52,000

Current Portion of bonds Payable

$35,000

Salaries Payable

$12,000

Income Taxes Payable

$10,000

Interest Payable

$4,000

Total Current Liabilities

$113,000

Long Term Liabilities:

Bonds Payable

$265,000

Total Long-term liabilities

$265,000

Total Liabilities

$378,000

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Most popular questions from this chapter

Retiring bonds payable before maturity

On January 1, 2018, Powell Company issued $350,000 of 10%, five-year bonds

payable

at 102. Powell Company has extra cash and wishes to retire the bonds payable

on

January 1, 2019, immediately after making the second semiannual interest

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retire the bonds, Powell Company pays the market price of 98.

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1. What is Powell Company’s carrying amount of the bonds payable on the

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3. Compute Powell Company’s gain or loss on the retirement of the bonds

payable.

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Long-term Liabilities 139,630 Property, Plant, and Equipment, Net 206,440

Compute the debt to equity ratio at December 31, 2018.

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4. Journalize the retirement of the bond at maturity, assuming the last interest paymenthas already been recorded. (Give the date).
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