Question

Van Rushing Hunting Goods' fiscal year ends on December 31. At the end of the 2021 fiscal year, the company had notes payable of $9.7 million due on February 8, 2022. Rushing sold 1.5 million shares of its $0.25 par, common stock on February 3, 2022, for $7.5 million. The proceeds from that sale along with $2.2 million from the maturation of some 3-month CDs were used to pay the notes payable on February 8 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 $76,500 Rushing's financial statements were finalized on March 3, 2022. Required: 1. What amount(s) if any, related to the situations described should Rushing report among current liabilities in its balance sheet at December 31, 2021? 2. What amount(s) if any, related to the situations described should Rushing report among long-term liabilities in its balance sheet at December 31, 2021? 3. What amount(s) 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 amount(s) 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? es

Answer 1

Answer Pageno refinanced on a term 2,200,000 Portion of the notes payable not long baliç thorough the ftock safe Liability for the payment of Employee's medical bills Cworent liability 76,500 $ 2,276, SOO The amount of long tegim liabilitiel to be gropoorted in the balance sheet at December 31, 2021ię $ 7,500,000 pr 7,5 millon 3) If the settlement had occured on isth march 2022. The payment of $ 76,506 for the Employe medical bill § will not be treated el a long term liability oor Corrent liability becaule dich a payment Could not have been considered as likely as on the date of issuance of finan- cial statemente

The Pageno@ answer to ist question would be $2.2 million The anseves to and question would be $ 45 million only. 4) If the injury occured on 3rd Jan the payment of $ 76,500 towards Emplogement medical bills would not be torated al long term liability oor Coorrent liability, because the liability did not take place af of 31 december 2021. aufwer to l&t queſtion coould be $2.2 million The auswer to and question would be $1.5 million only. January 2oaa, The