Question

Current Attempt in Progress Sarasota Corporation is preparing its December 31, 2020, balance sheet. The following items may be reported as either a current or long-term liability. 1. On December 15, 2020, Sarasota declared a cash dividend of $2.30 per share to stockholders of record on December 31. The dividend is payable on January 15, 2021. Sarasota has issued 1,000,000 shares of common stock, of which 50,000 shares are held in treasury. 2. At December 31, bonds payable of $114,286,000 are outstanding. The bonds pay 12% interest every September 30 and mature in installments of $28,571,500 every September 30, beginning September 30, 2021. 3. At December 31, 2019, customer advances were $12,485,000. During 2020, Sarasota collected $32,673,000 of customer advances; advances of $27,486,000 should be recognized in income. For each item above, indicate the dollar amounts to be reported as a current liability and as a long-term liability, if any. Reported as 1. Dividends payable " 2. Bonds payable (September 30, 2021 installment) 0 Bonds payable (Other than September 30, 2021 installment) 0 Interest payable 0 3. Customer advances 0

Answer 1

			Reported as
1)	Dividends payable	$ 2,185,000	Current liability
2)	Bonds payable ( September 30,2021 installment )	$ 3,428,500	Current liability
	Bonds payable (Other than September 30,2021 installment )	$ 85,714,500	Long Term Liability
	Interest payable	$ 28,571,500	Current liability
3)	Customer advances	$ 72,644,000	Current liability

ALL EXPLANATION IS GIVEN BELOW :

1)

Current Liability :

(Debit)Dividends $ 2,185,000

(Credit) Dividend payable       $ 2,185,0000

(1,000,000 -50,000 )shares *$ 2.30 per share = $ 2,185,000

2)

Current liability :

Interest Payable ={ $ 114,286,000 * 12 % * 3/12 } = $ 3,428,580

Bonds payable = $ 28,571,500

Long Term Liability :

Bonds payable = ($114,286,000 - $ 28,571,500) = $ 85,714,500

3)

Current Liability :

Customer Advances = ($12,485,000 + $ 32,673,000 +$ 27,486,000)

Customer Advances = $ 72,644,000