Question

Current Liabilities Bon Nebo Co. sold 12,000 annual subscriptions of Bjorn for $45 during December 20Y5. These new subscribers will receive monthly issues, beginning in January 20Y6. In addition, the business had taxable income of $340,000 during the first calendar quarter of 20Y6. The federal tax rate is 38%. A quarterly tax payment will be made on April 12, 20Y6. Prepare the current liabilities section of the balance sheet for Bon Nebo Co. on March 31, 20Y6.

Answer 1

Answer and Explanation:

The preparation of the current liabilities section of the balance sheet is presented below:

Federal Income Taxes Payable                  $129,200

($340,000 × 38%)        

Add: Advances on magazine subscriptions $405,000

(12, 000 × $45 × 9 ÷ 12)

Total Current Liabilities                                   $534,200

We simply added the advances to the federal income tax payable so that the total amount could come