Question

Samson Corporation is preparing its December 31, 2014 statement of financial position. The following items may be reported as either current or long-term liabilities:
1. On December 15, 2014, Samson declared a cash dividend of $2.50 per share to shareholders of record on December 31. The dividend is payable on January 15, 2015. San1son has issued one million common shares.
2. Also on December 31, Samson declared a 10% stock dividend to shareholders of record on January 15, 2015. The dividend will be distributed on January 31, 2015. Samson\; common shares have a market value of $54 per share.
3. At December 31, bonds payable of $ 100 million is outstanding. The bonds pay 7% interest every September 30 and mature in installments of $25 million every September 30, beginning on September 30, 2015.
4. At December 31, 2013, customer advances were $12 million. During 2014, Samson collected $40 million of customer advances, and advances of $25 million were earned.
5. At December 31, 2014, retained earnings set aside for future inventory losses is $22 million.
6. At December 31, 2014, Samson has an operating line of credit with a balance of $3.5 million. For several years now, Samson has successfully met all the conditions of this bank loan. If Samson defaults on any of the Joan conditions in any way, the bank has the right to demand payment of the loan.
Instructions
(a) For each item above, indicate the dollar amounts to be reported as a current liability and as a long-term liability, if any.
(b) Referring to the definition of a liability, explain the accounting treatment of item 4 above.


$1.99
Sales0
Views47
Comments0
  • CreatedSeptember 18, 2015
  • Files Included
Post your question
5000