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Current Liability - Diamon

Diamondback Company provided financial information as of December 31, 2021 including income taxes withheld from employees of $900,000, a cash overdraft of $1,300,000, accounts receivable with a credit balance of $750,000, estimated expenses of $500,000 and damages of $1,500,000, and accounts payable of $3,000,000. The total current liabilities on December 31, 2021 were $8,100,000.

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Ma Teresa B. Cerezo
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186 views1 page

Current Liability - Diamon

Diamondback Company provided financial information as of December 31, 2021 including income taxes withheld from employees of $900,000, a cash overdraft of $1,300,000, accounts receivable with a credit balance of $750,000, estimated expenses of $500,000 and damages of $1,500,000, and accounts payable of $3,000,000. The total current liabilities on December 31, 2021 were $8,100,000.

Uploaded by

Ma Teresa B. Cerezo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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1) Diamondback Company provided the following information on December 31, 2021:

Income taxes withheld from employees 900,000


Cash balance at First State Bank 2,500,000
Cash overdraft at Harbor Bank 1,300,000
Accounts receivable with credit balance 750,000
Estimated expenses of meeting warranties on merchandise previously sold 500,000
Estimated damages as a result of unsatisfactory performance on a contract 1,500,000
Accounts payable 3,000,000
Deferred serial bonds, issued at par and bearing interest at 12%, payable in semiannual
installments of P500,000 due April 1 and October 1 of each year, the last bond to be
paid on October 1, 2023. Interest is also paid semiannually. 5,000,000
Stock dividend payable 2,000,000

What is the total current liabilities on December 31, 2021?


A. 8,100,000 B. 8,950,000 C. 8,150,000 D. 9,000,000

SOLUTIONS: A
Income taxes withheld from employees 900,000
Cash balance at First State Bank – Cash, Current asset ---
Cash overdraft at Harbor Bank 1,300,000
Accounts receivable with credit balance 750,000
Estimated expenses of meeting warranties on merchandise previously sold 500,000
Estimated damages as a result of unsatisfactory performance on a contract 1,500,000
Accounts payable 3,000,000
Deferred serial bonds, issued at par and bearing interest at 12%, payable in semiannual
installments of P500,000 due April 1 and October 1 of each year, the last bond to be
paid on October 1, 2023. Interest is also paid semiannually. – if the last payment
will be on October 1, 2023, then if you count it carefully the first payment will
be on April 1, 2019, which is beyond 12 months from the date asked
(12/31/17)
---
Interest on the bonds (5,000,000 x 12% x 3/12) 150,000
Stock dividend payable – Equity ---
Total current liabilities 8,100,000

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