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WorksheetsB215 L10 LIABILITIES & CONTINGENT LIABILITIES
Total questions: 6
Worksheet time: 4mins
Teens Fashion Ltd (“TF”) is sued by a customer for $20,000 compensation as a bracelet bought from the company had caused her skin rash. TF’s lawyer advised that in most cases, such customers who have sensitive skin will be unsuccessful with their compensation claims.
Do Nothing
Record a Payable
Record a Provision
Disclose as a Contingent Liability in the Notes to the Accounts
Wallace Inc (“Wallace”) was sued by a customer for selling faulty light bulbs which exploded. The damage to the customer’s house was assessed to be $30,000. Lawyers have advised that it is highly probable that Wallace would have to compensate the customer for the damage caused since the light bulbs are still under the warranty period.
Do Nothing
Make a provision:
Dr Lawsuit Expense,
Cr Cash
Make a provision:
Dr Lawsuit Expense,
Cr Provision for Lawsuit
Disclose in the Notes to Accounts as Contingent Liability
Tap Ltd (“Tap”) borrowed a 3-year bank loan of $40,000 on 1 January 2021. The loan is to be paid off in 2 equal repayments in each year.
Below is the repayment schedule.
Based on the repayment schedule, Tap has to repay ________________ on every payment date.
$1,000
$6,262
$7,262
$33,738
Tap Ltd (“Tap”) borrowed a 3-year bank loan of $40,000 on 1 January 2021. The loan is to be paid off in 2 equal repayments in each year.
Below is the repayment schedule.
The amount of interest expense incurred in 2021 is ________________.
$1,000
$1,843.45
$2,526.44
$7,262.00
Tap Ltd (“Tap”) borrowed a 3-year bank loan of $40,000 on 1 January 2021. The loan is to be paid off in 2 equal repayments in each year.
Below is the repayment schedule.
“Current Portion of Bank Loan” in the Statement of Financial Position as at 31 December 2021 is ______.
$12,680.55
$13,322.50
$13,996.96
$34,737.39
4. Tap Ltd (“Tap”) borrowed a 3-year bank loan of $40,000 on 1 January 2021. The loan is to be paid off in 2 equal repayments in each year.
Below is the repayment schedule.
“Non-Current Portion of Bank Loan” in the Statement of Financial Position as at 31 December 2022 is ____.
$0
$7,084.88
$12,680.55
$13,996.96
