Sea Spray Marine experienced these events during the current year.
a. December revenue totaled $130,000; and, in addition, Sea Spray collected sales tax of 5%. The tax amount will be sent to the state of Rhode Island early in January.
b. On August 31, Sea Spray signed a six-month, 8% note payable to purchase a boat costing $80,000. The note requires payment of principal and interest at maturity.
c. On August 31, Sea Spray received cash of $ 1,800 in advance for service revenue. This revenue will be earned evenly over six months.
d. Revenues of $825,000 were covered by Sea Spray's service warranty. At January 1, estimated warranty payable was $11,400. During the year, Sea Spray recorded warranty expense of $33,000 and paid warranty claims of $34,500.
e. Sea Spray owes $70,000 on a long-term note payable. At December 31,6% interest for the year plus $25,000 of this principal are payable within one year.
Requirement
1. For each item, indicate the account and the related amount to be reported as a current liability on the Sea Spray Marine balance sheet at December 31.