The following selected account balances are from LightHouse Distributors’ adjusted trial balance at September 30, 2024:

Additional information:
1. On September 30, 2024, the unused operating line of credit is $75,000.
2. Warranties and gift cards are expected to be redeemed within one year. Unearned revenues relate to gift cards sold but not yet redeemed.
3. Of the mortgage, $10,000 is due each year.
4. Of the note payable, $1,000 is due at the end of each month.

Instructions
a. Prepare the current liabilities section of the balance sheet.
b. Calculate LightHouse’s current ratio and acid-test ratio.
c. Explain why the company did not report any cash as part of its current assets.

Taking It Further

The accountant for LightHouse argues that, since property taxes are unavoidable, a company should record the full year’s worth of property taxes as an expense when it is paid. Is the accountant correct? Explain.

Transcribed Image Text:

Accounts payable Accounts receivable Bank indebtedness CPP payable El payable HST payable Income tax payable Interest payable $ 90,000 182,000 62,500 7,500 3,750 15,000 35,000 10,000