Question

Mill Co.'s trial balance included the following account balances at December 31, 2016:

Accounts payable $15,000
Bond payable, due 2017 22,000
Dividends payable 1/31/17 8,000
Notes payable, due 2018 20,000
What amount should be included in the current liability section of Mill's December 31, 2016, balance sheet?
a) $45,000
b) $51,000
c) $65,000
d) $78,000

Answer 1

The total current liabilities for Mill Co. on the balance sheet dated December 31, 2016, include accounts payable, dividends payable, and bond payable totaling $45,000. Notes payable due in 2018 is not considered a current liability.

Step-by-step explanation:

The amount that should be included in the current liability section of Mill's December 31, 2016, balance sheet can be determined by considering which liabilities are due within one year from the balance sheet date. The accounts payable of $15,000 will definitely be a current liability since these are typically due within a short period.

The dividends payable by 1/31/17 of $8,000 will also be included in current liabilities, as this is also due within the next year. The bond payable, due 2017 of $22,000 is a current liability because it matures within the upcoming year. However, the notes payable, due 2018 of $20,000 is not due within the next year, so it is classified as a long-term liability. Therefore, the total current liabilities amount to $45,000 (i.e., $15,000 + $8,000 + $22,000).