A current liability is a short-term obligation that is normallyexpected to be settled within one year. For each of the followingevents and transactions that occurred in November 2017, indicatethe title of the current liability account that is affected and theamount that would be reported on a statement of financial positionprepared on December 31, 2017. If an event does not result in acurrent liability, explain why.
a) A customer purchased a ticket from WestJet Airlines For $ 470cash to travel in January 2018. Answer from WestJet'sstandpoint.
b) Hall Construction Company signs a contract with a customerfor the construction of a new $ 500,000 warehouse. At the signing,Hall receives a cheque for $ 50,000 as a deposit on the futureconstruction. Answer from Hall's standpoint.
c) On November 1, 2017, a bank lends $ 10,000 to a company. Theloan carries a 5 percent annual interest rate, and the principaland interest are due in a lump sum on October 31, 2018. Answer fromthe company's standpoint.
d) A popular ski magazine company receives a total of $ 17,800from subscribers on December 31, the last day of its fiscal year.The subscriptions begin in the next fiscal year. Answer from themagazine company's standpoint.
e) On November 20, the campus bookstore receives 900 accountingtextbooks at a cost of $ 70 each. The terms indicate that paymentis due within 30 days of delivery. Answer from the bookstore'sstandpoint.
f) Ziegler Company, a farm equipment company, receives its phonebill at the end of January 2018 for $ 2,300 for January calls. Thebill has not been paid to date.
A current liability is a short-term obligation that is normallyexpected to be settled within one year. For each of the followingevents and transactions that occurred in November 2017, indicatethe title of the current liability account that is affected and theamount that would be reported on a statement of financial positionprepared on December 31, 2017. If an event does not result in acurrent liability, explain why.
a) A customer purchased a ticket from WestJet Airlines For $ 470cash to travel in January 2018. Answer from WestJet'sstandpoint.
b) Hall Construction Company signs a contract with a customerfor the construction of a new $ 500,000 warehouse. At the signing,Hall receives a cheque for $ 50,000 as a deposit on the futureconstruction. Answer from Hall's standpoint.
c) On November 1, 2017, a bank lends $ 10,000 to a company. Theloan carries a 5 percent annual interest rate, and the principaland interest are due in a lump sum on October 31, 2018. Answer fromthe company's standpoint.
d) A popular ski magazine company receives a total of $ 17,800from subscribers on December 31, the last day of its fiscal year.The subscriptions begin in the next fiscal year. Answer from themagazine company's standpoint.
e) On November 20, the campus bookstore receives 900 accountingtextbooks at a cost of $ 70 each. The terms indicate that paymentis due within 30 days of delivery. Answer from the bookstore'sstandpoint.
f) Ziegler Company, a farm equipment company, receives its phonebill at the end of January 2018 for $ 2,300 for January calls. Thebill has not been paid to date.
