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Prepare the current liability section of The Cotton Company

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Reference no: EM132569393

Question - The Cotton Company Ltd has the following selected accounts after posting adjusting entries:

Accounts payable $40,000

Notes payable, 6-month $75,000

Accumulated depreciation - vehicles $17,000

Notes payable, 5-year, 8% $70,000

Income tax expense $8,000

Interest payable $7,000

Mortgage payable $115,000

GST payable $27,000

Required -

(a) Prepare the current liability section of The Cotton Company's Statement of Financial Position, assuming $15,000 of the mortgage is payable next year (precise formatting is not required - but make sure the inclusions, figures, and total/s are clear).

(b) Comment on The Cotton Company's liquidity, assuming total current assets are $300,000. Refer to relevant accounting ideas and terms in your comments, and state what is meant by 'liquidity'.

Reference no: EM132569393

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