Server Planet operates a web hosting company. Examine the following items and prepare the current liability section of the company's December 31, 20X7, balance sheet.B-12.02
Server Planet operates a web hosting company.
Examine the following items and
prepare the current liability section of the company's December 31, 20X7, balance
The beginning of year accounts payable was $100,000.
Purchases on trade
accounts during the year were $650,000, and payments on account were
The company incurs substantial costs for electricity to run its servers and air
As of December 31, 20X7, it is estimated that $55,000 of
electricity has been used, although the monthly billing for December has not yet
Server Planet sells web hosting plans for as low as $25 per month.
requires its customers to prepay in 6-month increments.
As of the end of the year,
$375,000 had been collected for 20X8 web hosting plans.
Web hosting services are subject to sales taxes, and Server Planet collected
$65,000 during the year.
All of these amounts have been remitted to taxing
authorities, with the exception of $5,000 that is due to be paid in January, 20X8.
The company has total bank loans of $1,500,000.
This debt bears interest at 6%,
As of December 31, 20X7, all interest had been paid, with the
exception of accrued interest for the last half of December.
The company's bank loans ($1,500,000) are all due on June 30, 20X8.
Server Planet has a Frm lending agreement with the bank to renew and extend
$1,000,000 of this amount on a 5-year basis.
The company intends to exercise
this renewal option, but is not yet sure about the Fnal disposition of the remainder.