Reference no: EM132480729

Listed below are selected items from the financial statements of Home Water Pump Ltd (HWPL) for the year ended December 31, 2019

I. Income taxes payable - $70,000

II. Note payable to People's Bank - $80,000

III. Loss contingency relating to lawsuit - $400,000

IV. Accounts payable and accrued expenses - $200,000

V. Mortgage note payable - $240,864

VI. Bonds payable - $2,200,000

VII. Premium on bonds payable - $1,406

VIII. Accrued bond interest payable - $110,000

IX. Pension expense - $61,400

X. Unearned revenue - $75,000

Additional Information

1. The note payable to People's Bank is due in 30 days. HWPL has arranged with this bank to renew the note for an additional two years. The bank agreed to the HWPL 's request.

2. HWPL has been sued for $400,000 by a customer claiming the company's pumps are excessively noisy. According to the advice of the company's legal counsel, it is reasonably possible, but not probable that a loss has been sustained

3. The mortgage note is payable at $8,000 per month over the next three years. During the next 12 months, the principal amount of this note will be reduced to $169,994,

4. The bonds payable mature in seven months. A sinking fund has been accumulated to repay the full maturity of this bond issue.

Question

Question a) Using the information given by the company, prepare the Current Liabilities and Long Term Liabilities sections of a Statement of Financial Position

Question b) Explain briefly how the information in each of the four numbered paragraphs (1)-(4) affected your presentation of the company's liabilities.