You explain to Alex that the second part of the balance sheet lists his liabilities -amounts that the restaurant owes to other parties. After some digging Alex puts together a list of what he owes.

Alex's Ristorante Balance Sheet

Liability Amount

Accounts payable $14.344

Sales and liquor tax payable $8.200

Mortgage on building $55,300

Payroll taxes payable $15,600

Note payable (due in November) $27,500

You look over the list and tell Alex, "Now we're going to separate these liabilities into two categories -- current liabilities, which need to be paid within a year, and long-term liabilities."

Categorize the liabilities listed in the liabilities section of Alex's Ristorante's balance sheet to correct category.

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andromache andromache · Answer 1 · 2020-05-15T04:36:50+02:00

Answer and Explanation:

As we know that

Current Liabilities are the liabilities which are due for one year payment i.e maximum time period.

While the Long Term Liabilities are the liabilities which are to be paid after one year and due beyond the year

Therefore, the classifications are as follows

Current Liabilities: Accounts Payable, Sales & Liquor Tax Payable, Payroll Taxes Payable, Notes Payable

These above are due and paid within one year so it is come under the current liabilities

And,

Long Term Liability: Mortgage on Building as it has a time period above one year