List A List B
__g___ 1. Long-term debt maturing within
a. FICA
__j___ 2. Borrowing from another
b. Acid-test ratio
__f___ 3. Classifying liabilities as either
c. Accrual accounting
__b___ 4. Cash, short-term investments,
d. Recording a
__i___ 5. Incurred on a notes payable. e. Unearned revenues
__c___ 6. Interest expense is recorded in
f. The riskiness of a
__h___ 7. Loss is reasonably possible and
g. Current portion of
__d___ 8. Loss is probable and can be
h. Disclosure of a
__e___ 9. Gift cards. i. Interest expense
__a___ 10. Social Security and Medicare. j. Commercial paper
Requirement 1
(a). November 1, 2015
Cash 40,000,000
(b). November 1, 2015
Notes Receivable 40,000,000
Requirement 2
(a). December 31, 2015
Problem 8-1C
Problem 8-2C
Interest Expense ($40 million x 6% x 2/12) 400,000
(b). December 31, 2015
Interest Receivable ($40 mil. x 6% x 2/12) 400,000
Requirement 3
(a). April 30, 2016
Notes Payable 40,000,000
Interest Expense ($40 million x 6% x 4/12) 800,000
Interest Payable ($40 million x 6% x 2/12) 400,000
(b). April 30, 2016
Cash 41,200,000
Interest Revenue ($40 million x 6% x 4/12) 800,000
Interest Receivable ($40 million x 6% x 2/12) 400,000
Requirement 1
January 31
Salaries Expense 150,000
Income Tax Payable 38,000
FICA Tax Payable 11,475
Problem 8-3C
Requirement 2
January 31
Salaries Expense (fringe benefits) 27,000
Payable to Blue Cross 12,000
Requirement 3
January 31
Payroll Tax Expense (total) 20,775
FICA Tax Payable 11,475
Requirement 1
January 24
Salaries Expense 1,000,000
Income Tax Payable 205,000
FICA Tax Payable 76,500
Payable for Retirement Plan 60,000
Requirement 2
January 24
Salaries Expense (fringe benefits) 98,000
Payable for Medical Insurance 25,000
Payable for Dental Insurance 6,000
Payable for Life Insurance 7,000
Problem 8-4C
Requirement 3
January 24
Payroll Tax Expense (total) 138,500
FICA Tax Payable 76,500
$38,400,000 = $480 per season ticket
$480 = $80 per individual game ticket
Cash 38,400,000
Unearned Revenue 6,400,000
Requirement 1
Cash 5,200
Requirement 2
Unearned Revenue 1,900
Sales ($1,900/1.07) 1,775.70
Problem 8-5C
Requirement 1
Requirement 2
Requirement 3
Problem 8-6C
Requirement 3
Unearned Revenue
The likelihood of loss is reasonably possible rather than probable, so
no journal entry is recorded. However, full disclosure of the contingent
Requirement 2
Requirement 3
Bad Debt Expense ($12 million x 3%) 360,000
Requirement 4
Leisure Luggage has a contingent gain that is probable and can be reasonably
estimated. Contingent gains are not recorded until the gain is certain. Though
Loss 500,000
The range of the potential loss (from $500,000 to $1 million) should also be disclosed.
Problem 8-8C
Requirement 1
Washington County Airport (WCA) has a contingent gain that is probable and can be
reasonably estimated at $500,000. Contingent gains are not recorded until the gain is
Requirement 2
The contingent liability is reasonably possible and can be reasonably estimated within
a range. Because the loss is not probable, no journal entry for a loss and liability is
Requirement 3
The contingent liability is probable and reasonably estimable, so it must be reported.
Because the estimate of the loss is a range where no amount within the range is a
better estimate than any other amount, the minimum amount of the range will be
recorded as follows:
Requirement 1
($ in millions)
Total
Current
Assets
÷
Total
Current
Liabilities
= Current
Ratio
Delta Airlines (0.81) has the best current ratio.
Requirement 2
($ in millions)
Quick
Assets
÷
Total
Current
Liabilities
= Acid-Test
Ratio
Delta Airlines (0.71) also has the best acid-test ratio.
Requirement 3
The purchase of additional inventory by issuing short-term debt would increase the
current ratio as both current assets and current liabilities would increase by an equal
Problem 8-9C