On March 1, 2014, borrowed $48,000 cash from the local bank. The note had a 7 pe

Question

On March 1, 2014, borrowed $48,000 cash from the local bank. The note had a 7 percent interest rate and was due on September 1, 2014.

Aliceville provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 3 percent of sales.

On October 1, 2014, borrowed $50,000 cash from the local bank. The note had a 10 percent interest rate and a one-year term to maturity.

A customer has filed a lawsuit against Aliceville for $100,000 for breach of contract. The company attorney does not believe the suit has merit.

Correct

Do not know the interest expense.

What amount of interest expense is reported on Aliceville’s income statement for the year?

Do not know balance sheet.

Prepare the current liabilities section of the balance sheet at December 31, 2014. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

The following selected transactions were taken from the books of Aliceville Company for 2014:

Explanation / Answer

Interest expense = $1680 + ($50000 x 10% x 3 / 12) = $1680 + $1250 = $2930

Sales tax payable = ($225000 x 7%) - ($200000 x 7%) = $15750 - $14000 = $1750

Warranty payable = $6750 - $3200 = $3550

ALICEVILLE COMPANY Balance Sheet (Partial) As of December 31, 2014 Current liabilities Notes payable 50000 Sales tax payable 1750 Interest payable 1250 Warranty payable 3550 Total current liabilities $ 56550

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.