ABC Company is preparing the liabilities section of its December 31, 2018 balance sheet. Selected information includes \$20,000 in accounts payable, \$100,000 in bonds payable, \$80,000 of short-term debt, \$10,000 in wages payable, \$10,000 in prepaid rent expense, and \$20,000 of unearned revenue. Furthermore, on January 1, 2018, ABC Company signed a \$60,000, 10% note payable with interest payable annually on December 31. The principal of the note payable is repaid in \$10,000 annual installments on January 1 of each year. The total of ABC's current liabilities is:

• A. \$300,000
• B. \$240,000
• C. \$150,000
• D. \$140,000

Answer: (D)

Verified step by step guidance

1. Identify all the current liabilities from the given information. Current liabilities are obligations that are expected to be settled within one year.
2. List the current liabilities: Accounts Payable (\$20,000), Short-term Debt (\$80,000), Wages Payable (\$10,000), and Unearned Revenue (\$20,000).
3. Consider the note payable: Since the principal is repaid in \$10,000 annual installments, the \$10,000 due on January 1, 2019, is a current liability.
4. Exclude non-current liabilities and non-liabilities: Bonds Payable (\$100,000) is a long-term liability, and Prepaid Rent Expense (\$10,000) is an asset, not a liability.
5. Add up all the current liabilities identified: \$20,000 (Accounts Payable) + \$80,000 (Short-term Debt) + \$10,000 (Wages Payable) + \$20,000 (Unearned Revenue) + \$10,000 (Current portion of Note Payable) to find the total current liabilities.