Exam 13: Current Liabilities and Contingencies

Which of the following is not true about the discount on short-term notes payable?

Trent, Inc., is a retail store operating in a state with a 5% retail sales tax.The state law provides that the retail sales tax collected during the month must be remitted to the state during the following month.If the amount collected is remitted to the state on or before the twentieth of the following month, the retailer may keep 3% of the sales tax collected.On April 10, 2007, Trent remitted $81,480 tax to the state tax division for March 2007 retail sales.What was Trent 's March 2007 retail sales subject to sales tax?

Utley Trading Stamp Co.records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees.Utley's past experience indicates that only 80% of the stamps sold to licensees will be redeemed.Utley's liability for stamp redemptions was $7,500,000 at December 31, 2005.Additional information for 2006 is as follows: Stamp service revenue from stamps sold to licensees \5 ,000,000 Cost of redemptions 3,400,000 If all the stamps sold in 2006 were presented for redemption in 2007, the redemption cost would be $2,500,000.What amount should Utley report as a liability for stamp redemptions at December 31, 2006?