Question

Presented below are various account balances of K.D. Lang Inc.

a. Unamortized premium on bonds payable, of which $3,000 will be amortized during the next year.
b. Bank loans payable of a winery, due March 10, 2024. (The product requires aging for 5 years before sale.)
c. Serial bonds payable, $1,000,000, of which $200,000 are due each July 31.
d. Amounts withheld from employees' wages for income taxes.
e. Notes payable due January 15, 2023.
f. Credit balances in customers' accounts arising from returns and allowances after collection in full of account.
g. Bonds payable of $2,000,000 maturing June 30, 2021.
h. Overdraft of $1,000 in a bank account. (No other balances are carried at this bank.)
i. Deposits made by customers who have ordered goods.

Required:
Indicate whether each of the items above should be classified on December 31, 2024, as a current liability, a long-term liability, or under some other classification.

Answer 1

a. Unamortized premium on bonds payable, of which $3,000 will be amortized during the next year.

Indication: Unamortized premium is a contra liability account and amortization is an expense account

b. Bank loans payable of a winery, due March 10, 2024. (The product requires aging for 5 years before sale.)

Indication: Long Term Liability

c. Serial bonds payable, $1,000,000, of which $200,000 are due each July 31.

Indication: 800000, Long term liability and 200000 current liability

d. Amounts withheld from employees' wages for income taxes.

Indication: Current Liability

e. Notes payable due January 15, 2023.

Indication: Long Term Liability

f. Credit balances in customers' accounts arising from returns and allowances after collection in full of account.

Indication: Account Receivable i

g. Bonds payable of $2,000,000 maturing June 30, 2021.

Indication: Current Liability

h. Overdraft of $1,000 in a bank account. (No other balances are carried at this bank.

Indication: Current Liability

i. Deposits made by customers who have ordered goods.

Indication: Current Liability