Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Textbook Question
Chapter 6, Problem 6.1E
Classification of Assets and Liabilities. Darin Development Company engaged in the following transactions during the current year.
- a. Borrowed $400,000 from Pleasantville Community Bank at the beginning of the year. The terms of the end call for annual payments of $50,000. The first annual payment has not been paid as of the end of the current year. (Ignore any interest payable.)
- b. Made sales for the current year amounting to $2,900,000 with 40% collected during the current year.
- c. Acquired inventory costing $345,000 on account.
- d. incurred taxes due on the current year's income of $76,000.
- e. Paid $60,000 for a three-year insurance policy in advance on January 1 of the current year.
- f. Acquired new equipment costing $890,000 by borrowing the full amount at the end of the current year The loan is due in 5 years.
Required
Identify and classify the noncash assets and liabilities resulting from the current-year transactions Assume that your classification is made as of the end of the current year
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Chapter 6 Solutions
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