Question

Van Rushing Hunting Goods' fiscal year ends on December 31. At the end of the 2021 fiscal year, the company had notes payable of $7.4 million due on February 8, 2022. Rushing sold 1.0 million shares of its $0.25 par, common stock on February 3, 2022, for $5.4 million. The proceeds from that sale along with $2.0 million from the maturation of some 3-month CDs were used to pay the notes payable on February 8. Through his attorney, one of Rushing's construction workers notified management on January 5, 2022, that he planned to sue the company for $1 million related to a work-site injury on December 20, 2021. As of December 31, 2021, management had been unaware of the injury, but reached an agreement on February 23, 2022, to settle the matter by paying the employee's medical bills of $76,000. Rushing's financial statements were finalized on March 3, 2022. Required: 1. What amount(s) if any, related to the situations described should Rushing report among current liabilities in its balance sheet at December 31, 2021? 2. What amount(s) if any, related to the situations described should Rushing report among long-term liabilities in its balance sheet at December 31, 2021? 3. What amount(s) if any, related to the situations described should Rushing report among current liabilities and long-term liabilities in its balance sheet at December 31, 2021 if the settlement agreement had occurred on March 15, 2022, instead? 4. What amount(s) if any, related to the situations described should Rushing report among current liabilities and long-term liabilities in its balance sheet at December 31, 2021 if the work-site injury had occurred on January 3, 2022, instead? (For all requirements, enter your answers in whole dollars.) 1 2 3 Current liability Long-term liability Current liability Long term liability 4 Current liability Long-term liability

Answer 1

Answer: Pageno current liabilities in its balance sheet at December 31,2021. - Portion of the notes payable not retained ona long term bali through the stock sale - 4 mi) =$2000,000 Liability for payment of Employee's medical bill = $ 46,000 .: Current liability = 2000,000 + 76,000 : - $ 2046,000 Rushing habe retained short term debt to the extent of $5.4 millon on long term basis

Pageno It ich treated as long term liabilities. 1. The remaining $2.0 million will theated at short term debt I current liability. Corent liability = $ 2076,000| ay long term liability :- the short term debt amount sufimanad with the ule of stock fall ia treated as refinancing on long term başię I Long term liability = $ 5400,000 3) The gettlement had occuud on March 15, 2022, :- 1 The Employeed medical bill payment would not be torat ment al current liability: Employee's medical bill payment = $ 16,000.

Page no current liability = $ 2000,000 Long term liability = $ 5.400,000 4) The injury had occured on January 3, 2022. :- The Employee's medical bill payment $16,000 hould not be treated al cuorent liability or long term liability. Current liabil 2,000,000 long term liability = $ 5,400,000 S.NO Particulars Amount current liability $2,046,000 Long term liability $5,400,000 3 current liability $ 2000,000 Long term liability $ 5,400,000 Current liability $ 2000,000 Long term liability 1$ 5,400,000 -