A current liability is a short- term obligation that is normally expected to be settled within one year. For each of the following events and transactions that occurred in November 2014, indicate the title of the current liability account that is affected and the amount that would be reported on a statement of financial position prepared on December 31, 2014. If an event does not result in a current liability, explain why.
a. A customer purchases a ticket from WestJet Airlines for $ 470 cash to travel in January 2015. Answer from WestJet’s standpoint.
b. Hall Construction Company signs a contract with a customer for the construction of a new $ 500,000 warehouse. At the signing, Hall receives a cheque for $ 50,000 as a deposit on the future construction. Answer from Hall’s standpoint.
c. On November 1, 2014, a bank lends $ 10,000 to a company. The loan carries a 9 percent annual interest rate, and the principal and interest are due in a lump sum on October 31, 2015. Answer from the company’s standpoint.
d. A popular ski magazine company receives a total of $ 1,800 from subscribers on December 31, the last day of its fiscal year. The subscriptions begin in the next fiscal year. Answer from the magazine company’s standpoint.
e. On November 20, the campus bookstore receives 500 accounting textbooks at a cost of $ 70 each. The terms indicate that payment is due within 30 days of delivery. Answer from the bookstore’s standpoint.
f. Ziegler Company, a farm equipment company, receives its phone bill at the end of January 2015 for $ 230 for January calls. The bill has not been paid to date.