ABC Corporation of Puerto Rico sellsall types of name brand electronic equipment like computers, faxmachines, cameras and more. The company started operations onOctober 1, 2015; uses the net price method to record itsmerchandise, uses a perpetual inventory system, closes itsbooks on December 31, and publishes its Annual Report byMarch 31 of each year.
On October 1, 2015, purchased, on credit, 2,000 units ofmerchandise at $500 each.Terms of the purchase were 2/10,n/120.Paid for 20% of these units on October 9, 2015 and theremaining 80% on January 2016.
On January, 2016 ABC entered into an agreement with its supplierto pay half of the amount owed using ABCâs common stocks.The otherhalf was paid with cash.
On December 1, 2015, purchased merchandise for $25,000, andissued a12%, 120-day note to XYZ.
On November 16, 2015, borrowed $20,000 from the Last Bank byissuing a 90 day, non-interest âbearing note.The bank discountedthis note at 12% and remitted to ABC the difference.
On October 30, 2015, acquired new equipment and signed a12-month note for $24,000. The face value of the note includes theprice of the equipment and interests. The note is paid in four$6,000 quarterly installments. The value of the equipment is thepresent value of the four quarterly payments discounted at anannual interest rate of 16%.
During the last quarter of 2015, the company had the followingsummary transactions:
Cash sales of $210,000, subject to sales taxes of 6%.
Sales on credit of $260,000, subject to sales taxes of 6%.
These taxes were paid on 2016.
The payroll for 2015 was as follows:
Total payroll, $177,000
Payroll in excess of $118,500, $2,500
Payroll in excess of $9,000, $153,000
Payroll in excess of $7,000, $157,000
No salaries are subject to the Additional Medicare Tax of0.9%.
Income taxes withheld, $27,357
Union dues withheld, $10,000
The company pays the state unemployment taxes in full, on time,and on all the same wages as are subject to FUTA tax.
During its first quarter of operations the company sold giftcertificates totaling $4,000. By December 31, 2015 all but $750worth of these certificates had been redeemed.Outstandingcertificates were redeemed by January 5, 2016.
On December 25, 2015, ABC learned that one of its competitors isselling in Puerto Rico a product over which ABC has exclusiverights to sell in the Caribbean.ABC filed suit against thecompetitor and in all likelihood, its attorneys felt, ABC shouldrecover at least $500,000.
REQUIRED:
Compute ABC Electronics TOTAL CURRENTLIABILITIES for 2015. Show all necessary computations.
ABC Corporation of Puerto Rico sellsall types of name brand electronic equipment like computers, faxmachines, cameras and more. The company started operations onOctober 1, 2015; uses the net price method to record itsmerchandise, uses a perpetual inventory system, closes itsbooks on December 31, and publishes its Annual Report byMarch 31 of each year.
On October 1, 2015, purchased, on credit, 2,000 units ofmerchandise at $500 each.Terms of the purchase were 2/10,n/120.Paid for 20% of these units on October 9, 2015 and theremaining 80% on January 2016.
On January, 2016 ABC entered into an agreement with its supplierto pay half of the amount owed using ABCâs common stocks.The otherhalf was paid with cash.
On December 1, 2015, purchased merchandise for $25,000, andissued a12%, 120-day note to XYZ.
On November 16, 2015, borrowed $20,000 from the Last Bank byissuing a 90 day, non-interest âbearing note.The bank discountedthis note at 12% and remitted to ABC the difference.
On October 30, 2015, acquired new equipment and signed a12-month note for $24,000. The face value of the note includes theprice of the equipment and interests. The note is paid in four$6,000 quarterly installments. The value of the equipment is thepresent value of the four quarterly payments discounted at anannual interest rate of 16%.
During the last quarter of 2015, the company had the followingsummary transactions:
Cash sales of $210,000, subject to sales taxes of 6%.
Sales on credit of $260,000, subject to sales taxes of 6%.
These taxes were paid on 2016.
The payroll for 2015 was as follows:
Total payroll, $177,000
Payroll in excess of $118,500, $2,500
Payroll in excess of $9,000, $153,000
Payroll in excess of $7,000, $157,000
No salaries are subject to the Additional Medicare Tax of0.9%.
Income taxes withheld, $27,357
Union dues withheld, $10,000
The company pays the state unemployment taxes in full, on time,and on all the same wages as are subject to FUTA tax.
During its first quarter of operations the company sold giftcertificates totaling $4,000. By December 31, 2015 all but $750worth of these certificates had been redeemed.Outstandingcertificates were redeemed by January 5, 2016.
On December 25, 2015, ABC learned that one of its competitors isselling in Puerto Rico a product over which ABC has exclusiverights to sell in the Caribbean.ABC filed suit against thecompetitor and in all likelihood, its attorneys felt, ABC shouldrecover at least $500,000.
REQUIRED:
Compute ABC Electronics TOTAL CURRENTLIABILITIES for 2015. Show all necessary computations.
