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11 November, 13:49

Bon Nebo Co. sold 25,000 annual subscriptions of Magazine 2018 for $85 during December 2018. These new subscribers will receive monthly issues, beginning in January 2019. In addition, the business had taxable income of $840,000 during the first calendar quarter of 2019. The federal tax rate is 40%. A quarterly tax payment will be made on April 12, 2019. Prepare the Current Liabilities section of the balance sheet for Bon Nebo Co. on March 31, 20Y9.

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  1. 11 November, 14:01
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    Current liabilities

    2,125,000 unarned revenue

    336,000 tax payable

    2,461,000 total current liability

    Explanation:

    taxable income x tax-rate = tax payable

    840,000 x. 4 = 336,000

    subscription x value = unearned revenue

    25,000 x 85 = 2,125,000 unearned revenue

    This amount will decrease over time, as the customers receive their magazines.

    Current liabilities

    2,125,000 unarned revenue

    336,000 tax payable

    2,461,000 total current liability
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