As of December 31 of the current year. Chernin Corporation has prepared the following information regarding its liabilities and other obligations:
Notes payable, of which $10,000 will be repaid within the next 12 months | $ 80,000 |
Interest expense that will result from existing liabilities over the next 12 months | 125,000 |
Lawsuit pending against the company, in which $500,000 is claimed in damages. Legal counsel can make no reasonable estimate of the company’s ultimate liability at this time | 500,000 |
20-year bond issue that matures in two years. The entire amount will be repaid from a bond sinking fund | 900,000 |
Accrued interest on the 20-year bond issue as of the balance sheet date | 36,000 |
Three-year commitment to John Higgins as chief financial officer at a salary of $250,000 per year | 750.000 |
Note payabie due within 90 days (but that is expected to be extended for an additional 18 months) | 75,000 |
Cash deposits from customers for goods and services to be delivered over the next nine months | 300,000 |
Income taxes, of which $100,000 are currently payable and the remainder.deferred indefinitely |
185,000 |
Instructions
a. Prepare a listing of the company’s current and long-term liabilities as they should be presented in the company’s December 31 balance sheet.
b. Briefly explain why you have excluded any of the listed items in your listing of current and long-term liabilities.
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