Current Liabilities New Wave Co. sold 15,500 annual subscriptions of Game Life f

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Current Liabilities
New Wave Co. sold 15,500 annual subscriptions of Game Life for $64 during December 2012. These new subscribers will receive monthly issues, beginning in January 2013. In addition, the business had taxable income of $624,000 during the first calendar quarter of 2013. The federal tax rate is 35%. A quarterly tax payment will be made on April 7, 2013.
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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

Federal income taxes payable = 624,000*.35 = 218,400 Advances on magazine subscriptions = 64*15,500 - 0.25*64*15,500 = 744,000 New WAve Co. Balance Sheet - Current liabilites section March 31, 2013 Current Liabilities: Federal income taxaes payable $218,400 Advances on Magazine Subscriptions $744,000 Total curent liabilities $962,400

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