Questions 10-1. Georgia Lazenby believes a current


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Questions 10-1. Georgia Lazenby believes a current liability is a debt that can be expected to be paid in one year. Is Georgia correct? Explain. 10-7. 1. What are long-term liabilities? Give two examples. 2. What is a bond? 10-8. Contrast these types of bonds: 1. Secured and unsecured. 2. Convertible and callable. 10-19. Valentin Zukovsky says that liquidity and solvency are the same thing. Is he correct? If not, how do they differ? BE10-1 Identify whether obligations are current liabilities. (1) Kananga Company has these obligations at December 31: (a) a note payable for $100,000 due in 2 years, (b) a 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments, (c) interest payable of $15,000 on the mortgage, and (d) accounts payable of $60,000. For each obligation, indicate whether it should be classified as a current liability. BYP10-1 Financial Reporting and Analysis Financial Reporting Problem: Tootsie Roll Industries 1. Refer to the financial statements of Tootsie Roll Industries and the Notes to Consolidated Financial Statements in Appendix A. Instructions Answer the following questions. a. What were Tootsie Roll’s total current liabilities at December 31, 2004? What was the increase/decrease in Tootsie Roll’s total current liabilities from the prior year? b. How much were the accounts payable at December 31, 2004? c. What were the components of total current liabilities on December 31, 2004 (other than accounts payable already discussed above)? Liabilities and Shareholders’ Equity December 31, 2004 2003 CURRENT LIABILITIES: Bank loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,333 $ – Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,315 11,947 Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,659 3,589 Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,722 38,834 Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,288 8,517 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82,317 62,887 NONCURRENT LIABILITIES: Bank loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,667 – Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,995 22,631 Postretirement health care and life insurance benefits . . . . . . . . . . . . . . . . … 10,075 9,302 Industrial development bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7,500 7,500 Deferred compensation and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 30,020 26,396 Total noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . …159,257 65,829 SHAREHOLDERS’ EQUITY: Common stock, $.69-4/9 par value- 120,000 shares authorized- 34,760 and 34,082, respectively, issued . . . . . . . . . . . . . . . . . . . . . . . . . 24,139 23,668 Class B common stock, $.69-4/9 par value- 40,000 shares authorized- 17,515 and 17,145, respectively, issued . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,163 11,906 Capital in excess of par value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397,745 357,922 Retained earnings, per accompanying statement . . . . . . . . . . . . . . . . . . . . 149,055 156,786 Accumulated other comprehensive earnings (loss) . . . . . . . . . . . . . . . . . (10,931) (11,709) Treasury stock (at cos…

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