(Learning Objective 1, 2, 3, 4: Measure and report current liabilities) Sea AirMarine experienced these events during the current year.a. December revenue totaled $120,000; and, in addition, Sea Air collected sales tax of 5%.The tax amount will be sent to the state of Florida early in January.b. On August 31, Sea Air signed a six-month, 6% note payable to purchase a boat costing$86,000. The note requires payment of principal and interest at maturity.c. On August 31, Sea Air received cash of $2,400 in advance for service revenue. Thisrevenue will be earned evenly over six months.d. Revenues of $850,000 were covered by Sea Air’s service warranty. At January 1,accrued warranty payable was $11,800. During the year, Sea Air recorded warrantyexpense of $34,000 and paid warranty claims of $34,500.e. Sea Air owes $90,000 on a long-term note payable. At December 31, 10% interest forthe year plus $30,000 of this principal are payable within one year.Requirement1. For each item, indicate the account and the related amount to be reported as a currentliability on the Sea Air Marine balance sheet at December 31.
(Learning Objective 1, 2, 3, 4: Measure and report current liabilities) Sea Air
Marine experienced these events during the current year.
a. December revenue totaled $120,000; and, in addition, Sea Air collected sales tax of 5%.
The tax amount will be sent to the state of Florida early in January.
b. On August 31, Sea Air signed a six-month, 6% note payable to purchase a boat costing
$86,000. The note requires payment of principal and interest at maturity.
c. On August 31, Sea Air received cash of $2,400 in advance for service revenue. This
revenue will be earned evenly over six months.
d. Revenues of $850,000 were covered by Sea Air’s service warranty. At January 1,
accrued warranty payable was $11,800. During the year, Sea Air recorded warranty
expense of $34,000 and paid warranty claims of $34,500.
e. Sea Air owes $90,000 on a long-term note payable. At December 31, 10% interest for
the year plus $30,000 of this principal are payable within one year.
Requirement
1. For each item, indicate the account and the related amount to be reported as a current
liability on the Sea Air Marine balance sheet at December 31.
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