ASSIGNMENT 5

ACCT 201
Q.1When are the current liabilities reported ?Mention few
examples of current liabilities?

Current liability is reported if one of the following two conditions exists:

1. Liability is expected to be settled within its normal operating
cycle; or
2. Liability is expected to be settled within 12 months after the
reporting date.

Current Liability includes

Accounts payable.
Notes payable.
Current maturities of long-term debt.
Short-term obligations expected to be refinanced.
Dividends payable.
Customer advances and deposits.
Unearned revenues.
Sales taxes payable.
Income taxes payable.
Employee-related liabilities.

Q2.Castle National Bank agrees to lend $100,000 on March

1, 2011, to Green Landscape Company for which Green
Landscape signs a $100,000, 6 percent, four-month note.
Green

Landscape

prepares

financial

statements

semiannually.

REQUIRED:
Record journal entries in the books of green landscape
company for cash receipt from the bank, adjusting entry
on 30th June and payment entry on maturity of note
payable on july 1st.
Date
March
1
June
30
July 1

Account
Cash
Note Payable
Interest Expenses (100,000
6%4/12)
Interest Payable
Interest Payable
Note Payable
Cash

Dr.
100,000

Cr.
100,000

2,000
2,000
2,000
100,000
102,000