Refer to the Following List of Liability Balances at December

question 143

Multiple Choice

Refer to the following list of liability balances at December 31, 2019. $$\begin{array} { | l | r | } \hline \text { Accounts Payable } & \$ 15,000 \\\hline \text { Employee Health Insurance Payable } & 1150 \\\hline \text { Employee Income Tax Payable } & 600 \\\hline \text { Estimated Warranty Payable (Due 2020) } & 1400 \\\hline \text { Long-Term Notes Payable (Due 2022) } & 40,000 \\\hline \text { FICA-OASDI Taxes Payable } & 1060 \\\hline \text { Sales Tax Payable } & 670 \\\hline \text { Mortgage Payable (Due 2023) } & 15,000 \\\hline \text { Bonds Payable (Due 2024) } & 54,000 \\\hline \text { Current Portion of Long-Term Notes Payable } & 10,500 \\\hline\end{array}$$ What is the total amount of long-term liabilities?

• A) $55,000
• B) $109,000
• C) $94,000
• D) $40,000

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Definitions:

Coase Theorem

An economic theory that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient allocation of resources regardless of the initial distribution of property rights.

Liability Rules

Legal principles that dictate how responsibilities and damages are to be handled or compensated in cases of harm or infringement.

Bargaining

The process of negotiating the terms of a transaction or agreement between parties, often involving compromises from the initial positions.

Property Rights

The legal rights to possess, use, and dispose of assets including real property, personal property, and intellectual property.