Brief Exercises

Topics: Accounts receivable, Promissory note, Balance sheet Pages: 2 (304 words) Published: June 4, 2013
Presented below are three receivables transactions. Indicate whether these receivables are reported as accounts receivable, notes receivable, or other receivables on a balance sheet. | (a)  | Sold merchandise on account for $64,000 to a customer.| |

(b)  | Received a promissory note of $57,000 for services performed.| |
(c)  | Advanced $10,000 to an employee.a. accounts receivableb. notes receivablec. other receivables|

The following expenditures were incurred by Obermeyer Company in purchasing land: cash price $70,000, accrued taxes $3,000, attorneys' fees $2,500, real estate broker's commission $2,000, and clearing and grading $3,500. What is the cost of the land?

Answer: $81,000

Determine the cost of land.
(SO 1)

Neeley Company incurs the following expenditures in purchasing a truck: cash price $30,000, accident insurance $2,000, sales taxes $1,500, motor vehicle license $100, and painting and lettering $400. What is the cost of the truck?

Answer: $34,000

Determine the cost of a truck.
(SO 1)

Buffaloe Company has the following obligations at December 31: (a) a note payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability. (Assume an operating cycle of less than one year.)

A. Note payable for 100,000 due in 2 years
B. A 10 year mortgage payable of $300,000 payable in ten $30,000 annual payments C. Interest payable of $15,000 on the mortgage
D. Accounts payable of $60,000.



Identify whether obligations are current liabilities.
(SO 1)
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