[arasradio]

I need help with my assignment... especially how to answer questions 4 . Please help... Thank you very much.

Frederic Chopin Corporation is preparing its December 31, 2007, balance sheet. The following items may be reported as either a current or long-term liability.

Instructions

For each item above indicate the dollar amounts to be reported as a current liability and as a long-term liability, if any.


1- On December 15, 2007, Chopin declared a cash dividend of $2.50 per share to stockholders of record on December 31. The dividend is payable on January 15, 2008. Chopin has issued 1 million shares of common stock, of which 50,000 shares are held in treasury.

Long-Term Liability
Capital Stock 2,375,000
Treasury Stock 137,500

2- At December 31, bonds payable of $100 million are outstanding. The bonds pay 7% interest every September 30 and mature in installments of $25 million every September 30, beginning September 30, 2008.

Long-Term Liability
Bonds Payble 100 million dollars??


3- At December 31, 2006, customer advances were $12,000,000. During 2007, Chopin collected $40 million of customer advances, and advances of $ 25 million were earned.

Current Liability
27 million dollars??

4- At December 31, 2007, Chopin has an operating line of credit with a balance of $3.5 million. For several years now, Chopin has successfully met al conditions of this bank loan. If chopin defaults on any of the loan conditions in anyway, the bank has the right to demand payment on the loan

Long term Liabilities

3.5 Million?? (I don't really get this question)

I would really appreciate if you can help me on these questions! I have been up all night for these ! Thanks a million

[pready]

Dividends payable is a Current Liability.

If a liability is payable within 1 yr or 1 accounting period then it is considered a Current Liability.

If the Liability is payable after 1 yr or 1 accounting period then it is considered a Long-Term Liability.

Customer Advances is considered Unearned Revenue therefore it is a Current Liability