1. ASHFORD ACC 205 Week 4 Liability
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Liability. Please complete each of the exercises below in a word document. Save
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1. Prepayments by customers
Greenland Enterprises began a new magazine in the fourth quarter of 19X2.
Annual subscriptions, which cost $18 each, were sold as follows: Number of
Subscriptions
Sold
October
400
November
700
December
1,000
If subscriptions begin (and magazines are sent) in the month of sale:
a. Present the necessary journal entry to record the magazine subscriptions sold
during the fourth quarter.
b. Determine how much subscription revenue Greenland earned by the end of
19X2.
c. Compute Greenland's liability to subscribers at the end of 19X2.
2. Notes payable
Sentry Security Systems purchased $72,000 of office equipment on April 1, 19X3,
by signing a three-year, 12% note payable to Sharp, Inc. One-third of the
principal, along with interest on the outstanding balance, is payable each April 1
until maturity. (The first payment is due in 19X4.)

2. a. Fill in the following table to reflect Sentry's liabilities, assuming a March 31
year-end.
March 31
19X4 19X5 19X6
Current liabilities
Current portion of long-term debt
Interest payable
Long-term liabilities
Long-term debt
amount. The note is due in 30 days and carries a 14% interest rate.
Oct.
10
The note to Paris Enterprises was paid in full.
11
The note to Datatex Equipment was due today, but insufficient funds were
available for payment. Management authorized the issuance of a new 20-day,
18% note for $60,700, the maturity value of the original obligation.
31
The new note to Datatex Equipment was paid in full.
a. Income is divided on the basis of a ratio of the beginning capital investments.
b. Partners are allowed 12% interest on their investments; the remaining profits
and losses are allocated on a 6 :1 :3 basis.
c. Frank and Hogan each receive salary allowances of $24,000 per year; the
remaining profits and losses are shared equally.
6. Investment by partners; financial statements
Abram, Haas, and Tidwell formed a partnership to practice law by combining their
respective sole proprietorships. The assets and liabilities contributed to the firm
on January 2, 19X4, the date of formation, follow. Abram

3. Land
BookValue
$40,000
Fair
MarketValue
$115,000
Mortgagepayable
38,000
38,000
Haas
Officesupplies
42,000
30,000
Officeequipment
64,000
48,000
Tidwell
Cash
50,000
50,000
Accountsreceivable
20,000
18,000
Short-terminvestments
4,000

4. 7,000