Current Liabilities New Wave Co. sold 10,000 annual subscriptions of Game Life f

Question

Current Liabilities

New Wave Co. sold 10,000 annual subscriptions of Game Life for $75 during December 2012. These new subscribers will receive monthly issues, beginning in January 2013. In addition, the business had taxable income of $550,000 during the first calendar quarter of 2013. The federal tax rate is 40%. A quarterly tax payment will be made on April 7, 2013.



Prepare the Current Liabilities section of the balance sheet for New Wave Co. on March 31, 2013.


New Wave Co.
Balance Sheet - Current Liabilities section
March 31, 2013


Current liabilities:

Federal income taxes payable $_________________________

Advances on magazine subscriptions _________________________

Total current liabilities $_________________________

$

Explanation / Answer

Current liabilities:
Federal income taxes payable 220,000
Advances on magazine subscription 562500 (750000/12*9)
Total current liabilities 782500

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