Question

Van Rushing Huntong 8 2022 Rushing sold 3.5 Van Rushing Hunting Goods' fiscal year ends on December 31. At the end of the 2021 fiscal year, the company had notes payable of $18.0 million due on February 8, 2022 Rushing sold 3.5 million shares of its $0.25 par, common stock on February 3, 2022, for $14.0 million. The proceeds from that sale along with $4.0 million from the maturation of some 3-month CDs were used to pay the notes payable on February 8. the maturation of some 3-monde Through his attorney, one of Rushing's construction workers notified management on January 5, 2022, that he planned to sue the company for $1 million related to a work-site injury on December 20, 2021. As of December 31, 2021, management had been unaware of the injury, but reached an agreement on February 23, 2022, to settle the matter by paying the employee's medical bills of $77,000. Rushing's financial statements were finalized on March 3, 2022 Required: 1. What amounts) if any, related to the situations described should Rushing report among current liabilities in its balance sheet at December 31, 2021? 2. What amounts) if any, related to the situations described should Rushing report among long-term liabilities in its balance sheet at December 31, 2021? 3. What amounts) if any, related to the situations described should Rushing report among current liabilities and long-term liabilities in its balance sheet at December 31, 2021 if the settlement agreement had occurred on March 15, 2022, instead? 4. What amounts) if any, related to the situations described should Rushing report among current liabilities and long-term liabilities in its balance sheet at December 31, 2021 if the work site injury had occurred on January 3, 2022, instead? (For all requirements, enter your answers in whole dollars.)

Answer 1

1
Portion of the notes payable not refinanced on a long-term basis through the stock sale	4,000,000
Liability for the payment of employee's medical bills	77,000
Current Liability	$4,077,000
2
The amount of long term liabilities to be reported in the balance sheet at December 31, 2021 is $14 million
3
If the settlement had occurred on 15th March 2022, the payment of $77,000 for employee's medical bills will not be treated as a long term liability or current liability because such a payment could not have been considered as likely as on the date of issuance of financial statements. The answer to 1st question would be $4 million and 2nd question would be $14 million only.
4
If the injury occurred on 3rd January 2022 , the payment of $77,000 towards employee's medical bills would not be treated as long term liability or current liability because the liability did not take place as of 31 December 2021.The answer to 1st question would be $4 million and 2nd question would be $14 million only.