Question

PART C Conrad Ltd had the following events during the financial year ended 30 June 2016. (i) On 1 May 2016, the company signed a three month 12% per annum note payable for $96,000. Interest and principal are paid at maturity. June sales totalled $320,000. The company collected goods and services tax (GST) of 10% on this amount. This is due to be paid to the tax office in the next month. On 30 June 2016, the company took out a loan for $120,000 from MelEquity Bank. Repayments of principal are scheduled evenly over a six-year period. Interest (10% per annum) on the loan is paid in the year it is incurred. (iii) REQUIRED: For each of the above events, indicate the account and the amount to be included as a current liability on Conrad Ltd's Balance Sheet (i.e. Statement of Financial Position) as at 30 June 2016.

Answer 1

Answers

[i]

Current Liability:
Notes Payable - Short term	$96,000
Interest Payable ($96000 x 12% x 2/12)	$1,920
	$97,920

[ii]

Current Liability:
Sales Tax Payable or GST Payable($320000 x 10%)	$32,000

[iii]

Current Liability:
Loan Payable ($ 120000 / 6 years)	$20,000