Q11SE - Horngren'S Financial And Managerial Accounting

Question

Preparing the liabilities section of the balance sheet

Luxury Suites Hotels includes the following selected accounts in its general ledger at

December 31, 2018:

Notes Payable (long-term) \( 200,000 Accounts Payable \) 33,000

Bonds Payable (due 2022) 450,000 Discount on Bonds Payable 13,500

Interest Payable (due next year) 1,000 Salaries Payable 2,600

Estimated Warranty Payable 1,300 Sales Tax Payable 400

Prepare the liabilities section of Luxury Suites’s balance sheet at December 31, 2018.

Step-by-Step Solution

Answer

The total of the liabilities side of the balance sheet is $474,800.

Step 1: Definition of the interest payable

Interest payable is the interest that is due but not paid.

Step 2: Liabilities side of balance sheet

Luxury Suites
Balance Sheet
as of December 31, 2018
Current Liabilities:
Accounts Payable	$33,000
Interest Payable	$1,000
Salaries Payable	$2,600
Sales Tax Payable	$400
Estimated Warranty Payable	$1,300
Total Current Liabilities		$38,300
Long-term Liabilities:
Notes Payable	$200,000
Bonds Payable	$450,000
Less: Discount on Bonds Payable	($13,500)
Total Long-Term Liabilities		$436,500
Total Liabilities		$474,800