Question

The following items appear on the balance sheet of a company with a one-year operating cycle. Identify the proper class each item as follows: C if it is a current liability, Lif it is a long-term liability, or N if it is not a liability Classification с Item 1. Interest payable (due in 90 days) 2. Unearned revenues (to be earned over next 3 months) 3. Employee Union Dues Payable 4. Pension liability (to be paid to employees retiring in 2 to 5 years) 5. Warranty liability (6 months of coverage) 6. FICA—Social Security Taxes Payable 7. FICA—Medicare Taxes Payable 8. Prepaid Insurance (6 months of coverage) 9. Sales taxes payable. 10. Pension liability (to be fully paid to retired employees in next 11 months) L N

Answer 1

Classificaion of Items of Balance Sheet.

Item 1 Interest payable (due in 90 days) 2 Unearned revenues to be earned over next 3 months) 3 Employee Union Dues Payable 4 Pension liability (to be paid to employees retiring in 2 to 5 years) 5 Warranty liability (6 months of coverage) 6 FICA- Social Security Taxes Payable 7 FICA- Medicare Taxes Payable 8 Prepaid Insurance (6 months of coverage) 9 Sales taxes payable 10 Pension liability (to be fully paid to retired employees in next 11 months) Classification с с с L с с с N с с

	Item	Classification
1	Interest payable ( due in 90 days)	C
2	Unearned revenues (to be earned over next 3 months)	C
3	Employee Union Dues Payable	C
4	Pension liability (to be paid to employees retiring in 2 to 5 years)	L
5	Warranty liability (6 months of coverage)	C
6	FICA- Social Security Taxes Payable	C
7	FICA- Medicare Taxes Payable	C
8	Prepaid Insurance (6 months of coverage)	N
9	Sales taxes payable	C
10	Pension liability (to be fully paid to retired employees in next 11 months)	C