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Bon Nebo Co. sold 30,000 annual subscriptions of Bjorn for $105 during December 20Y5. These new subscribers will receive monthly issues, beginning in January 20Y6. In addition, the business had taxable income of $970,000 during the first calendar quarter of 20Y6. The federal tax rate is 40%. 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.
Bon Nebo Co.
Current Liabilities Section of Balance Sheet
March 31, 20Y6
Current liabilities: Advances on magazine subscriptions $
Federal income taxes payable Total current liabilities $

Sagot :

Total advance received = 30000 annual subscription x $ 105 = $ 3,150,000

Revenue earned till 31 Mar (for 3 months) = $ 3150000 x 3/12 = $ 787,500

Advances on magazine subscription on 31 Mar = $ 3150000 – 787500 = $ 2,362,500

Current Liabilities Section of Balance Sheet

March 31, 20Y6

Current liabilities:

Advances on magazine subscriptions

$ 2,362,500

Federal income taxes payable ($970000 x 40%)

$ 388,000

Total current liabilities

$ 2,750,500

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