As of December 31 of the current year, Petersen Corporation has prepared the following information regarding its liabilities and other obligations:
Notes payable, of which $12,000 will be repaid within
the next 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ 80,000
Interest expense that will result from existing liabilities over
the next 12 months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,000
Lawsuit pending against Petersen, in which $600,000
is claimed in damages. Legal counsel can make no reasonable
estimate of the company's ultimate liability at this time . . . . . . . . . . . . . . . . . . . . . .600,000
20-year bond issue that matures in two years. The entire
amount will be repaid from a bond sinking fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000
Accrued interest on the 20-year bond issue as of the balance
sheet date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,000
Three-year commitment to John Hoskins as chief financial
officer at a salary of $275,000 per year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .825,000
Note payable due within 90 days (but that is approved to
be extended for an additional 18 months) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000
Cash deposits from customers for goods and services to
be delivered over the next nine months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Income taxes, of which $100,000 are currently payable
and the remainder deferred indefinitely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,000
Instructions
a. Prepare a listing of the Petersen Corporation's current and long-term liabilities as they should be presented in the company's December 31 balance sheet.
b. Briefly explain why you have excluded any of the listed items in your listing of current and long-term liabilities.