Comprehensive Liability Problem Balance Sheet Presentation

Comprehensive Liability Problem - Balance Sheet Presentation PeSehkestacplan Balzac Inc has been producing quality children\'s apparel for more than 25 years. The company\'s fiscal year runs from April 1 to March 31. The following information relates to the obligations of Balzac as of March 31, 2015. Bonds Payable-Balzac issued $5,000,000 of 11% bonds on July 1, 2009, at 96 which yielded proceeds of $4,800,000. The bonds will mature on July 1, 2019. Interest is paid semiannually on July 1 and January 1. Balzac uses the straight-line method to amortize the bond discount. Notes Payable - Balzac has signed several long-term notes with financial institutions and insurance companies. The maturities of these notes are given below. The total unpaid interest for all of these notes amount to $210,000 on March 31, 2015. Due Date April 1, 2015 July 1, 2015 October 1, 2015 January 1, 2016 March 31, 2017 April 1, 2017-March 31, 2018 April 1, 2018-March 31,2019 April 1, 2019-March 31, 2020 April 1, 2020-March 31, 2021 Amount Due 200,000 300,000 150,000 150,000 600,000 500,000 700,000 400,000 $3,500,000

Solution

Balance Sheet of Balzac Inc as on 31st MArch 2015

Notes To Accounts

1. Dividend Entry

Dividend Account Dr 7800000

to Dividend payable 7800000

2. Note payable

Non current Liability Payable after 1year 2700000

Current Liability payable in !year 800000

3. Warranty

Last Year Warranty Liability return off in current year 84000

Accured Warranty Account Dr 84000

To Cash 84000

Current Year Warranty Due

1. warranty expense Account Dr 210000

To accured warranty 210000

2. Accured Warranty Account Dr 95000

To Cash 95000

4..Bond

Entry

July Interest Expense Account Dr 285000

To Discount on Bond 10000

To Interest Payable 275000

Jan Interest Expense Account Dr 285000

To Discount on Bond 10000

To Interest Payable 275000

Amortization Table

Non Current Liability
Bond payable		4905000
Note payable		2700000
Current Liability
Note payable		800000
Interest payable on notes	210000
Trade payable		370000
Accured Warranty liability	115000
(210000-95000)
Payroll liability		202000
Government dues		617000
Miscellanous liab		75000
Dividend
Common share		1200000
Common stock		6600000
Interest on Bond payable	137500