Question

1. On December 16, Dicopolo sold $12,000 worth of goods on account. The customer has 30 days to pay the bill. The customer paid $4,000 five days after the date of sale and promised to pay the balance by the due date.

2. As of December 31, 2019, Dicopolo’s employees had accrued $186,000 of salaries that were to be paid on January 10, 2020.

3. Throughout the year, Dicopolo sold $630,000 of equipment that had a one-year warranty. Dicopolo estimates that 1% of all sales will be returned for defects and that the defects will cost $3.50 to repair. As of December 31, Dicopolo had paid $8,600 of repairs for the year. (Assume there was no beginning balance in the warranty liability account and that this equipment is separate from the one in items 1 and 2).
   

For each of the scenarios above, determine how much would be classified as a current liability and how much would be classified as a non-current liability on the December 31, 2019 Balance Sheet. If an amount is not classified as a liability, explain how we would account for it.

Answer 1