1, Which of the wollowing is not a liability? A, An unused line of credit B, Cur

Question

1, Which of the wollowing is not a liability?

A, An unused line of credit

B, Current portion of long-term debit

C, Sales tax collected from customers

D, Unearned revenue

2, On December 11, 2015, Jaron Co received magazine subscriptions for 2016 in cash for $200. Make the entry to record the recipt of this cash in 2015.

3, If you buy lunch for 16.35 that includes 9% sales tax, how much did the restaurent charge you for lunch and how much do they owe for sales taxes?

4, United Supply has a $25 million liability at December 31, 2015, of which $5 million is payable in each of the next five years. What portion of the $25 million is current and what is long term at 12/31/2015?

Explanation / Answer

1)correct option is "A"-An unused line of credit

It is a arrangement between the financial institution and a customer establishing a maximum amount of loan that can be taken by customer .so any unused credit limit is not a liability for a customer.

2)

3)Lunch cost : 16.35/(1+.09)

             = 16.35/1.09

              = $ 15

Sales tax =15*.09 = 1.35

4)Current liability : $5 million as it is payable within one year from reporting period

Non current liability -all liability that is payable after one year of reporting period = 25-5 current= $20 million

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