Yu Accounting Orange Inc. Short-term Liabilities Snapshot questions

College of Business Administration
Accounting Department
Question#1: Answer the following questions:
1. If cash is borrowed on a $50,000, 6-month, 12% note on September 1, how much interest
expense would be incurred by December 31?
2. The cash register total including sales taxes is $23,320, and the sales tax rate is 6%. What
is the sales taxes payable?
3. If $15,000 is collected in advance on November 1 for 3 months’ rent, what amount of rent
revenue should be recognized by December 31?
Question#2: Giant Corporation issues $200,000 of bonds for $189,000. Show how the bonds
would be reported on the balance sheet at the date of issuance.
Question #3: Presented here are liability items for Orange Inc. at December 31, 2024. Prepare
the liabilities section of O’Orange’s balance sheet.
Accounts payable $157,000
FICA taxes payable $ 7,800
Notes payable 20,000
Interest payable 40,000 (due May 1, 2025)
Notes payable (due 2026) 80,000
Bonds payable (due 2029) 900,000
Income taxes payable 3,500
Unearned rent revenue 240,000
Sales taxes payable 1,700
Discount on bonds payable 41,000
Question#4: Rolman Corporation is authorized to issue 1,000,000 shares of $5 par value
common stock. In its first year, the company has the following stock transactions.
– Jan. 10 Issued 400,000 shares of stock at $8 per share.
– Sept. 21 Purchased 10,000 shares of common stock for the treasury at $9 per share.
– Dec. 24 Declared a cash dividend of 10 cents per share on common stock outstanding.
Prepare the stockholders’ equity section of the balance sheet, assuming the company had
retained earnings of $150,600 on December 31 and an accumulated other comprehensive loss
of $105,000.
Question#5: Vertical analysis (common-size) percentages for Austin Company’s sales, cost
of goods sold, and expenses are listed here.
Vertical Analysis
2023
2022
2021
Sales revenue
100.0%
100.0%
100.0%
Cost of goods sold
61.2
62.4
63.5
Operating expenses
26.5
27.4
28.5
Did Austin Company’s net income as a percent of sales increase, decrease, or remain
unchanged over the 3-year period? Provide numerical support for your answer?
Question#6: Summary financial information for Rose Company is as follows.
December 31, 2017
December 31, 2016
Current assets
Plant assets (net)
Total assets
$234,000
756,000
$990,000
$180,000
420,000
$600,000
Compute the amount and percentage changes in 2017 using horizontal analysis, assuming 2016
is the base year