Question

Current Liabilities Bon Nebo Co. sold 25,000 annual subscriptions of Magazine 20XX for $85 during December 20Y8. These new subscribers will receive monthly issues, beginning in January 20Y9. In addition, the business had taxable income of $840,000 during the first calendar quarter of 20Y9. The federal tax rate is 40%. A quarterly tax payment will be made on April 12, 20Y9. Prepare the Current Liabilities section of the balance sheet for Bon Nebo Co. on March 31, 20Y9.

Answer 1

Answer:

Total Current Liabilities                                               $1,929,750

Explanation:

The question is prepare the current liabilities section of Bon Nebo Cos. Balance Sheet as at March 31, 20Y9

Current Liability refers to the company's financial obligation to others or third parties that are due within a year. Current Liabilities usually include taxation for the year based on the net income, advances paid by people/customers for benefits they are to enjoy within the next one year. It could also include creditors if any and other accounts payable

For Bon Nebo Co. The Current Liabilities Section is as follows as at March 31, 20Y9

Particulars                                                                    Amount

Federal Income Taxes Payable                                 $336,000

($840,000 x 40%)

Add: Advances for Magazine Subscription              $1,593,750

(25,000 x $85)

=2, 125,000 x(9/12)

(This is because by March 20Y9, only

three months would have been supplied

out of 12 months)

Total Current Liabilities                                               $1,929,750