Exercise 9-1 Classifying liabilities LO C1 The following items appear on the balance sheet of a company with a one year operating cycle. Identify the proper classification of each item as follows: C if it is a current liability, L if it is a long-term liability, or Nif it is not a liability. Item Classification
1. Notes payable (due in 13 to 24 months)
2. Notes payable (due in 6 to 11 months).
3. Notes payable (mature in five years).
4. Current portion of long-term debt.
5. Notes payable (due in 120 days).
6. FUTA taxes payable
7. Accounts receivable
8. Sales taxes payable.
9. Salaries payable.
10. Wages payable

1. Notes payable (due in 13 to 24 months)  - L

Long term because period of payment is over a year.

2. Notes payable (due in 6 to 11 months).  - C

Current because period of payment is under a year.

3. Notes payable (mature in five years).  - L

Long term because it will mature after a period of a year.

4. Current portion of long-term debt.  - C

Current because it deals with payment for the year.

5. Notes payable (due in 120 days).  - C

Current as it matures in less than a year.

6. FUTA taxes payable  - C

Taxes are for a single period making them current.

7. Accounts receivable  - N

This is an asset not a liability

8. Sales taxes payable.  - C

As this is this for the year, it is current.

9. Salaries payable.  - C

For the period so they are a current liability.

10. Wages payable - C

Concern one period so are a current liability.

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