Exercises:
8-2; 8-5; 8-11 only
E8-1
Current liabilities
Objs|2, 7

? Total current liabilities, $892,000

Carabiner Co. sold 28,000 annual magazine subscriptions for $40 during December 2012. These new subscribers will receive monthly issues, beginning in January 2013. In addition, the business had taxable income of $130,000 during the first calendar quarter of 2013. The federal tax rate is 40%. A quarterly tax payment will be made on April 15, 2013.
Prepare the Current Liabilities section of the balance sheet for Carabiner Co. on March 31, 2013
E8-2
Notes payable
Obj|2
A business issued a 30-day, 7% note for $36,000 to a creditor on account. Illustrate the effects on the accounts and financial statements of recording (a) the issuance of the note and (b) the payment of the note at maturity, including interest.
E8-3
Recording income taxes
Illustrate the effects on the accounts and financial statements of recording the following selected transactions of Sid’s Leather Co.
Apr. 15.
Paid the first installment of the estimated income tax for the current fiscal year ending December 31, $29,000. No entry had been made to record the liability.
a.
Calculate the employer’s payroll taxes, using the following rates: state unemployment, 4.3%; federal unemployment, 0.8%.
b.
Illustrate the effects on the accounts and financial statements of recording the accrual of payroll taxes.
E8-4
Deferred income taxes
Obj|2
Warehouse System Inc. recognized service revenue of $960,000 on its financial statements in 2011. Assume, however, that the tax code requires this amount to be recognized for tax purposes in 2012. The taxable income for 2011 and 2012 is $7,100,000 and $8,900,000, respectively. Assume a tax rate of 40%.
 Illustrate the effects on the accounts and financial statements of the tax expense, deferred taxes, and taxes payable for 2011 and 2012, respectively.
E8-5
Accrued product warranty
Fungus Audio Works Inc. warrants…