Question 9. Question : (TCO D) On December 31, 2010, Irey Co. has
$2,000,000 of short-term notes payable due on February 14, 2011.
On January 10, 2011, Irey arranged a line of credit with County
Bank that allows Irey to borrow up to $1,500,000 at 1% above the
prime rate for 3 years. On February 2, 2011, Irey borrowed
$1 ,200,000 from County Bank and used $500,000 additional cash to
liquidate $1,700,000 of the short-term notes payable. The amount of
the short-term notes payable that should be reported as current
liabilities on the December 31, 2010 balance sheet issued on March
5, 2011 is
Question 10. Question : (TCO D) Vargas Company has 35
employees who work 8-hour days and are paid hourly. On January
1, 2009, the company began a program of granting its employees 10
days of paid vacation each year. Vacation days earned in 2009 may
first be taken on January 1, 2010. Information relative to these
employees is as follows:
Vargas has chosen to accrue the liability for compensated absences
at the current rates of pay in effect when the compensated time is
earned. What is the amount of the accrued liability for compensated
absences that should be reported at December 31, 2011?