The following items appear on the balance sheet of a company with a two-month op

Question

The following items appear on the balance sheet of a company with a two-month operating cycle. Identify the proper classification of each item as follows: C if it is a current liability, L if it is a long-term liability, or N if it is not a liability, Notes payable (due in 13 to 24 months). Notes payable (due in 6 to 12 months). Notes payable (mature in five years). Current portion of ling-term debt. Notes payable (due in 120 days). FUTA taxes payable. Accounts receivable. Sales taxes payable. Salaries payable. Wages payable.

Explanation / Answer

A current liability which is due within 1 year and long term liabilities which due after 1 year is long term liability.

1 Notes payable Due in 13 to 24 months L It will due after 1 year 2 Notes payable Due in 06 to 12 months C It is due within 1 year 3 Notes payable matures in five years L It will due after 1 year 4 Currnt portion of long-term debt L The current portion of long-term debt is the amount of principal that will be due within one year 5 Notes payable due in 120 days C It is due within 1 year 6 FUTA Tax payable C It is generally due within 1 year 7 Account receivable N It's an asset 8 sales tax payable C It is generally due within 1 year 9 salaries payable C It is generally due within 1 year 10 wages payable C It is generally due within 1 year

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