Question

5. Following is a list of account balances at the end of the year: Estimated Warranty Payable (products sold with 1-year warranty) Notes Payable (due in 3 annual installments) Retained Earnings Interest Payable Accounts Payable Payroll Tax Expense Unearned commissions $1,000 6,000 15,000 200 11,500 2,500 4,500 The correct amount of current liabilities that would be reported on the balance sheet is $14,700. $21,700. $19,200. $18,700. C. D.

How do you get this answer?? Please be detailed.

Answer 1

Correct answer----------(c) $19,200

Working

Warrenty payable	$    1,000.00
Notes payable (Payable within a year)	$    2,000.00
Interest payable	$        200.00
Accounts payable	$ 11,500.00
Unearned commission	$    4,500.00
Total current liabilities	$ 19,200.00

Current liabilities are liabilities that are estimated to be settled or paid within a year.

Notes payable are not all current liabilities, only the first installment is current liabilities since it is supposed to be paid in a year.