Exercise 8-23 Assume that Pinnacle Golf Equipment completed these selected transactions during

Assume that Pinnacle Golf Equipment completed these selected transactions during December 20X7. 

 

a. Sales of $2,000,000 are subject to estimated warranty cost of 3%. The estimated warranty payable at the beginning of the year was $30,000, and warranty payments for the year totaled $55,000.

 

b. On December 1, Pinnacle signed a $100,000 note payable that requires annual payments of $20,000 plus 9% interest on the unpaid balance each December 1. 

 

c. Academy Sports, a chain of sporting goods stores, ordered $100,000 of golf equipment. With its order, Academy Sports sent a check for $100,000, and Pinnacle shipped $85,000 of the goods. Pinnacle will ship the remainder of the goods on January 3, 20X8.

 

d. The December payroll of $100,000 is subject to employee withheld income tax of 9% and FICA tax of 8%. On December 31, Pinnacle pays employees their take-home pay and accrues all tax amounts.

 

Instructions: 

 

Classify each liability as current or long-term and report the liability and its amount that would appear on the Pinnacle Golf Equipment balance sheet at December 31, 20X7. Show a total for current liabilities.