11-1 TopicsQuestions ExercisesExercisesProblemsCases 1.Concept of liabilities; 11, 21 2.Accounts payable; 7, 9, 291, 2, 3211, 2, 3 3.Deposits, advance 104144, 5 4.Long-term liability; 3, 424, 5 5.Issuance of bonds; types of 15, 16, 175, 6, 7, 85, 9, 104, 10 7.Contingent liabilities 1111, 125, 6, 13, 8.Guaranties, warranties, and 11-2 ItemDescription E11-2Accounts and notes payable.Moderate15-20 E11-3Classification of liabilities.Simple15-20 E11-4Classification.Simple15-20 E11-5Entries for bond transactions.Simple15-20 E11-6Warranties.Simple10-15 E11-7Warranties.Moderate15-20 E11-16Ratio computations and analysis.Simple20-25 E11-17Ratio computations and effect of transactions.Moderate15-25 *E11-18Entries for bond transactionsÑeffective interest.Simple15-20 *E11-19Amortization scheduleÑeffective interest.Simple15-20 11-3 11-4 Payables and receivables generally involve an interest element. Recognition of the interest their current value. The present value of a liability represents the debt exclusive of the interest that existing working capital will be used to satisfy the debt. Liabilities often become callable by the creditor when there is a violation of the debt agreement. Only if it can be shown that it is 11-5 (a)Funds might be obtained through long-term debt from the issuance of bonds, and from the 11-6 prevailing interest rates. Also, the company may not want to make a very large cash outlay all 11-7 probable, reasonably possible, are used in to denote the chances of a future event occurring, the result of which is a gain or loss to the enterprise. If it is that a loss has been incurred at the date of the financial statements, then the liability (if reasonably estimable) should be recorded. If it is that a loss has been incurred at the date of the financial statements, then the liability should be disclosed via a footnote. The footnote should disclose (1) the nature of the estimate cannot be made. If the incurrence of a loss is 11-8 29.The student may propose several defensible recommendations for listing current liabilities: (1) in order of maturity, (2) according to amount, (3) in order of liquidation preference. The authorsÕ recent review of published financial statements disclosed that a significant majority of amount, followed most often by Òaccounts payable,Ó and ending the current liability section with 30.The acid-test ratio and the current ratio are both measures of the short-term debt-paying ability of the company. The acid-test ratio excludes inventories and prepaid expenses on the basis 11-9 July 1Purchases40,000 Accounts Payable....................................40,000 Freight-in1,200 Cash...........................................................1,200 July 3Accounts Payable..............................................6,000 11-10 11/1/03Cash..................................................................50,000 Discount on Notes Payable............................1,125 Notes Payable.........................................51,125 12/31/03Interest Expense..............................................750 Discount on Notes Payable...................750 2/1/04Interest Expense................................................375 Discount on Notes Payable.....................375 Notes Payable....................................................51,125 Cash...........................................................51,125 8/1/03Cash..................................................................180,000 Unearned Subscription Revenue..........180,000 12/31/03Unearned Subscription Revenue...................75,000 Subscription Revenue...........................75,000 $300,000 X .37689$113,067 $13,500 X 12.46221 168,240 Issue price$281,307 11-11 (a)Cash..............................................................200,000 Bonds Payable....................................200,000 (b)Interest Expense..........................................10,000 Cash ($200,000 X 10% X 6/12)............10,000 (c)Interest Expense..........................................10,000 Interest Payable..................................10,000 Cash........................................................................196,000 Discount on Bonds Payable.................................4,000 Bonds Payable..............................................200,000 Cash........................................................................206,000 Bonds Payable..............................................200,000 Premium on Bonds Payable........................6,000 11-12 Bonds Payable...................................................................600,000 Premium on Bonds Payable.............................................15,000 Unamortized Bond Issue Costs..............................5,250 Cash...........................................................................594,000 Gain on Redemption of Bonds...............................15,750 (a)Lawsuit Loss.............................................................700,000 Lawsuit Liability...............................................700,000 (b)No entry is necessary. The loss is not accrued because it is not 11-13 amount is both estimable and probable. This entry will reduce income by $200,000 and Kohlbeck will report a litigation liability of $200,000. The 2003Warranty Expense...........................................70,000 11-14 Oil Platform........................................................................500,000 11-15 (b)Interest Expense....................................................12,893 Premium on Bonds Payable..................................1,107 Cash...............................................................14,000 (c)Interest Expense....................................................12,860 Premium on Bonds Payable..................................1,140 Interest Payable............................................14,000 Interest Expense...............................................................4,298 Premium on Bonds Payable............................................369 Interest Payable.......................................................4,667 11-16 (a)Sept. 1Purchases.................................................50,000 Accounts Payable..........................50,000 Oct. 1Accounts Payable....................................50,000 Notes Payable.................................50,000 Oct. 1Cash..........................................................50,000 Discount on Notes Payable....................6,000 Notes Payable.................................56,000 11-17 (b)Dec. 31Interest Expense.....................................1,500 Interest Payable.............................1,500 Dec. 31Interest Expense.....................................1,500 Discount on Notes Payable..........1,500 (c)(1)Note payable$50,000 Interest payable 1,500 (2)Note payable$56,000 Less discount ($6,000 Ð $1,500) 4,500 11-18 11-19 1.Paul Simon Company: (a)1/1/03Cash.................................................200,000 Bonds Payable.......................200,000 (b)7/1/03Bond Interest Expense...................4,500 Cash........................................4,500 (c)12/31/03Bond Interest Expense...................4,500 Interest Payable.....................4,500 2.Graceland Company: (a)6/1/03Cash.................................................105,000 Bonds Payable.......................100,000 Bond Interest Expense.........5,000 (b)7/1/03Bond Interest Expense...................6,000 Cash........................................6,000 (c)12/31/03Bond Interest Expense...................6,000 Interest Payable.....................6,000 11-20 (a)Cash (200 X $4,000)...............................................800,000 Sales..............................................................800,000 Warranty Expense..................................................17,000 Cash...............................................................17,000 Warranty Expense ($66,000 Ð $17,000)................49,000 Estimated Liability Under Warranties.........49,000 (b)Cash........................................................................800,000 Sales..............................................................800,000 Warranty Expense..................................................17,000 Cash...............................................................17,000 (a)Cash........................................................................3,000,000 Sales..............................................................3,000,000 Warranty Expense..................................................20,000 Cash...............................................................20,000 Warranty Expense..................................................100,000 Estimated Liability Under Warranties.........100,000 11-21 (b)Cash.....................................................................3,000,000 Sales............................................................2,850,000 Unearned Warranty Revenue....................150,000 Warranty Expense...............................................20,000 Cash.............................................................20,000 Unearned Warranty Revenue.............................25,000 Warranty Revenue......................................25,000 ()EXERCISE 11-8 (15-20 minutes)Reacquisition price ($900,000 X 101%)$909,000 Loss on redemption$ 29,700 11-22 Bonds Payable........................................................900,000 Loss on Redemption of Bonds (Extraordinary)..29,700 Unamortized Bond Issue Cost.....................7,200 Discount on Bonds Payable........................13,500 Cash................................................................909,000 Cash........................................................................8,820,000 Discount on Bonds Payable (.02 X $9,000,000)...180,000 Bonds Payable..............................................9,000,000 Bonds Payable........................................................6,000,000 Loss on Redemption of Bonds (Extraordinary)..270,000 Cash ($6,000,000 X 1.02)..............................6,120,000 Discount on Bonds Payable........................120,000 Unamortized Bond Issue Costs...................30,000 11-23 Reacquisition price.................................................$6,120,000 Loss on redemption................................................$ 270,000 Reacquisition price ($300,000 X 104%)...................$312,000 Loss on redemption.................................................. Bonds Payable..........................................................300,000 Loss on Redemption of Bonds (Extraordinary).....22,000 Discount on Bonds Payable...........................10,000 Cash..................................................................312,000 Cash...........................................................................306,000 Unamortized Bond Issue Costs...............................3,000 Premium on Bonds Payable...........................9,000 Bonds Payable.................................................300,000 11-24 11-25 Depreciation Expense............................................4,187.90 Accumulated Depreciation...........................4,187.90* Interest Expense.....................................................2,512.74 1IINENE 2NENENENE 3NEIDD 4IINENE 5NEIDD 6IIII 7NEIDD 8NEIDD 9NEIDD 11-26 10NEIDD 11DDNENE 12IIII 13DDNENE 14NEDII 11-27 2003$ 0 20043,500,000 20055,500,000($2,000,000 + $3,500,000) 20069,500,000($6,000,000 + $3,500,000) 20073,500,000 (a)1.Current ratio = 11-28 2.Acid-test ratio = 3.Accounts receivable turnover = 4.Inventory turnover = 6.Profit margin on sales = (b)Financial ratios should be evaluated in terms of industry peculiarities and prevailing business conditions. Although industry company appears to have a relatively strong current position. The main concern from a short-term perspective is the apparently low 11-29 (a)1.$318,000 2.$820,000 3.$1,400,000 4.$410,000 5.$410,000 6.$410,000 (b)1.No effect on current ratio. 11-30 (a)1/1/04Cash ($600,000 X 102%).............................612,000 Bonds Payable..................................600,000 Premium on Bonds Payable............12,000 (b)7/1/04Bond Interest Expense...............................29,835 Premium on Bonds Payable......................165 Cash....................................................30,000 (c)12/31/04Bond Interest Expense............................29,827 Premium on Bonds Payable....................173 Interest Payable..............................30,000 Carrying amount of bonds at January 1, 2004$612,000 ($30,000 Ð $29,835) (165) Carrying amount of bonds at July 1, 2004$611,835 11-31 Jan. 1, 2003$1,855,816.00 Dec. 31, 2003$200,000$228,836.80$28,836.80* 1,884,652.80 Dec. 31, 2004200,000228,836.80 28,836.80 1,913,489.60 Dec. 31, 2005200,000228,836.80 28,836.80 1,942,326.40 Dec. 31, 2006200,000228,836.80 28,836.80 1,971,163.20 Dec. 31, 2007200,000228,836.80 28,836.80 2,000,000.00 (a)Printing and engraving costs of bonds$12,000 Legal fees49,000 Commissions paid to underwriter 60,000 Amount to be reported as Unamortized Bond Issue Costs$121,000 Interest expense to be recorded on October 31, 2003$ 18,750 11-32 (a)1.June 30, 2004 Cash.....................................................4,300,920.00 Bonds Payable...........................4,000,000.00 Premium on Bonds Payable.....300,920.00 2.December 31, 2004 Bond Interest Expense.......................258,055.20 Premium on Bonds Payable..............1,944.80 Cash............................................260,000.00 3.June 30, 2005 Bond Interest Expense.......................257,938.51 () X 12% X 6/12]Premium on Bonds Payable..............2,061.49 Cash............................................260,000.00 4.December 31, 2005 Bond Interest Expense.......................257,814.82 ( $2,061.49) X 12% X 6/12]Premium on Bonds Payable..............2,185.18 Cash............................................260,000.00 (b)Long-term Liabilities: Bonds payable, 13% (due on June 30, 2024)$4,000,000.00 Premium on Bonds Payable* 294,728.53 Book value of bonds payable$4,294,728.53 11-33 (c)1.Interest expense for the period from January 1 to June 30, 2005 from (a) 3.$257,938.51 July 1 to December 31, 2005 from (a) 4. 257,814.82 reported for 2005$515,753.33 2.The amount of bond interest expense reported in 2005 will be Total cash outlays for the bond14,400,000 Cash received at issuance of the bond (4,300,920) of the bond$10,099,080 4.They will be the same. 11-34 (a)January 1, 2003 Cash.............................................................537,907.37 Premium on Bonds Payable.............37,907.37 Bonds Payable...................................500,000.00 1/1/03ÐÐÐ$537,907.37 12/31/03$60,000.00$53,790.74$6,209.26531,698.11 12/31/0460,000.0053,169.816,830.19524,867.92 12/31/0560,000.0052,486.797,513.21517,354.71 (c)December 31, 2003 Bond Interest Expense...............................53,790.74 Premium on Bonds Payable......................6,209.26 Cash....................................................60,000.00 (d)December 31, 2005 Bond Interest Expense...............................52,486.79 Premium on Bonds Payable......................7,513.21 Cash....................................................60,000.00 11-35 (1)Maturity value$10,000,000$25,000,000$20,000,000 (2)Number of interest401010 (3)Stated rate per period15%010% (4)Effective rate per period12%12%12% (5)Payment amount per 0$2,000,000 (6)Present value$11,733,639 periods ($375,000 X 23.11477) =$ 8,668,039 ($10,000,000 X .30656) = 3,065,600 11-36 ($25,000,000 X .32197) =$ 8,049,250 ($2,000,000 X 5.65022) =$11,300,440 ($20,000,000 X .32197) 6,439,400 11-37 PurposeÑto situations related to liabilities. The situations presented are basic ones including purchases and payments on account, and borrowing funds by giving a zero-interest-bearing note. The student is disclosure for a contingent loss due to lawsuits. The student is required to prepare a journal entry and a footnote. The student is also required to discuss any liability incurred by a company due to the risk of loss from lack of insurance coverage. A straightforward problem dealing with contingent (Time 35-45 minutes) PurposeÑto provide the student with a comprehensive problem dealing with contingent losses. The student is required to prepare journal entries for each of three independent situations. For each situation, the student must also discuss the appropriate disclosure in the financial statements. The situations presented include a lawsuit, an expropriation, and self-insurance situation. This problem 11-38 necessitated for a bond issuance. This problem involves two independent bond issuances with the of each of the individual numbers. The student is to prepare journal entries to reflect the information 11-39 Purchases49,000 Accounts Payable49,000 Accounts Payable49,000 Purchase Discounts Lost1,000 Cash50,000 Trucks40,000 Cash4,000 Notes Payable36,000 Cash80,000 Discount on Notes Payable12,000 Notes Payable92,000 11-40 2. Interest Expense ($36,000 X 12% X 9/12)3,240 Interest Payable3,240 3. Interest Expense ($12,000 X 8/12)8,000 Discount on Notes Payable8,000 11-41 (a)Heide Co. Selling price of the bonds ($3,000,000 X 103%)$3,090,000 28, 2004 ($3,000,000 X 9% X 2/12) 45,000 Total cash received from issuance of the bonds3,135,000 Less: Bond issuance costs 27,000 (b)Reymont Co. Face value of Bonds$500,000 Issue price 469,280 Interest expense to be reported for 2003$ 30,720 (c)Czeslaw Building Co. 2005$400,0002008$200,000 2006 350,0002009 350,000 2007 200,000 (d)Marie Curie Inc. equipment, there are no debenture bonds outstanding for the 11-42 (a)Cash (300 X $3,500)1,050,000 Sales1,050,000 (b)Cash (300 X $3,500)1,050,000 Sales1,050,000 Warranty Expense (300 X [$155 + $185])102,000 Estimated Liability Under Warranties102,000 11-43 (a)1.Cash or Accounts Receivable4,810,000 Sales (650 X $7,400)4,810,000 2.Warranty Expense120,250 Parts Inventory ($170 X 650 X 1/2)55,250 Accrued Payroll ($200 X 650 X 1/2)65,000 3.Warranty Expense120,250 Estimated Liability Under Warranties120,250 ()4.Estimated Liability Under Warranties120,250 Parts Inventory55,250 Accrued Payroll65,000 (b)1.Cash or Accounts Receivable4,810,000 Sales4,810,000 2.Warranty Expense120,250 Parts Inventory55,250 Accrued Payroll65,000 11-44 4.Warranty Expense120,250 Parts Inventory55,250 Accrued Payroll65,000 11-45 ($5,000,000 X 60%)3,000,000 Liability for Uninsured Accident3,000,000 defendant in personal injury suits totaling $5,000,000. The Company is charging the year of the casualty with $3,000,000 in estimated losses, lack of insurance coverage itself. FASB Statement No. 5 does not amount of the losses is reasonably estimable. The cause for a loss 11-46 (a)1.Loss from Uninsured Accident225,000 Liability for Uninsured Accident225,000 2.Loss Due to Expropriation2,245,000 Allowance for Expropriation2,245,000 ()3.No entry required. (b)1.A loss and a liability have been recorded in the first case the amount is reasonably estimable. That is, the occurrence of 11-47 2.An entry to record a loss and establish an allowance due to 11-48 3.Even though ShoyoÕs chemical product division is uninsurable 11-49 1.Memo prepared by: new line of dishwasher. Sales of 100,000 dishwashers during this period amounted to $50,000,000. These dishwashers were sold under a one- 11-50 3.Warranty Expense 1,500,000 Estimated Liability Under Warranties 1,500,000 (To accrue estimated warranty costs) 2.Memo prepared by: 11-51 Expense from Loss Contingency3,330,000 Accrued Loss3,330,000 3.Memo prepared by: 11-52 (a)Magazine Subscriptions Collected in Advance400,000 Magazine Subscriptions Revenue400,000 December 31, 2002$2,300,000 + $800,000) 1,900,000 Credit to revenue account$ 400,000 (b)No entry should be made to accrue for an expense, because the 11-53 3/1/03Cash..............................................................236,045 Discount on Bonds Payable........................13,955 Bonds Payable....................................250,000 Maturity value of bonds payable$250,000 ($250,000 X .66506)$166,265 ($12,500 X 5.58238) 69,780 Proceeds from sale of bonds (236,045) Discount on bonds payable$ 13,955 9/1/03Interest Expense.......................................14,163 Discount on Bonds Payable...........1,663 Cash..................................................12,500 12/31/03Interest Expense.......................................9,508 Discount on Bonds Payable...........1,175 Interest Payable ($12,500 X 4/6).....8,333 3/1/04Interest Expense.......................................4,754 Interest Payable........................................8,333 Discount on Bonds Payable...........587 Cash..................................................12,500 11-54 9/1/04Interest Expense..........................................14,368 Discount on Bonds Payable.............1,868 Cash.....................................................12,500 12/31/04Interest Expense..........................................9,653 Discount on Bonds Payable.............1,320 Interest Payable..................................8,333 3/1/03$236,045 9/1/03$12,500$14,163$1,663 237,708 3/1/04 12,500 14,262 1,762 239,470 9/1/04 12,500 14,368 1,868 241,338 3/1/05 12,500 14,480 1,980 243,318 9/1/05 12,500 14,599 2,099 245,417 3/1/06 12,500 14,725 2,225 247,642 9/1/06 12,500 14,858 2,358 250,000 6/1/03Cash.................................................................638,780 Premium on Bonds Payable.................38,780 Bonds Payable.......................................600,000 11-55 Maturity value of bonds payable$600,000 ($600,000 X .67684)$406,104 ($36,000 X 6.46321) 232,676 Proceeds from sale of bonds 638,780 12/1/03Interest Expense.......................................31,939 Premium on Bonds Payable....................4,061 Cash ($600,000 X .12 X 6/12)...........36,000 12/31/03Interest Expense ($31,736 X 1/6).............5,289 Premium on Bonds Payable....................711 Interest Payable ($36,000 X 1/6).....6,000 6/1/04Interest Expense ($31,736 X 5/6).............26,447 Interest Payable........................................6,000 Premium on Bonds Payable....................3,553 Cash..................................................36,000 10/1/04Interest Expense.......................................4,203 Premium on Bonds Payable....................597 Cash..................................................4,800 11-56 10/1/04Bonds Payable.............................................120,000 Premium on Bonds Payable.......................5,494 Gain on Redemption of Bonds.........4,294 Cash.....................................................121,200 ($126,000 Ð $120,000 X 12% X 4/12)$121,200 Gain on redemption$ (4,294) 12/1/04Interest Expense ($31,523 X .8*)................25,218 Premium on Bonds Payable.......................3,582 Cash ($36,000 X .8).............................28,800 12/31/04Interest Expense..........................................4,173 Premium on Bonds Payable.......................627 Interest Payable..................................4,800 11-57 6/1/05Interest Expense ($31,299 X .8 X 5/6)......20,866 Interest Payable........................................4,800 Premium on Bonds Payable....................3,134 Cash ($36,000 X .8)..........................28,800 12/1/05Interest Expense ($31,064 X .8)...............24,851 Premium on Bonds Payable....................3,949 Cash ($36,000 X .8)..........................28,800 6/1/03$638,780 12/1/03$36,000$31,939$4,061 634,719 6/1/04 36,000 31,736 4,264 630,455 12/1/04 36,000 31,523 4,477 625,978 6/1/05 36,000 31,299 4,701 621,277 12/1/05 36,000 31,064 4,936 616,341 6/1/06 36,000 30,817 5,183 611,158 12/1/06 36,000 30,558 5,442 605,716 6/1/07 36,000 30,284* 5,716 600,000 11-58 The bonds were sold at a discount of $5,651. Evidence of the 11-59 current and long-term liabilities, and to explain accrued liabilities. The student must also describe how liabilities are valued, speculate as to why notes payable are usually reported first in the current PurposeÑto long-term nature of the items. The student must think about when typical short-term items might not accounting for a bond issue. The student is required to discuss the conceptual merits for each of noninsurable flood risk. Also, the student indicates how to account for coupons included with a PurposeÑto contingency can be recorded in the accounts. The student is also required to indicate the proper 11-60 PurposeÑto the proper treatment in the financial statements of loss contingencies. The situations include 11-61 (a)A liability is defined as Òprobable future sacrifices of economic benefits arising from present 11-62 (a)If a liability is scheduled to mature within one year after the date of an enterpriseÕs balance 11-63 the time value of money. This would be a fair presentation of the bond obligations only if to pay interest at regular intervals and (2) to pay the principal at maturity. The investors who through January 1, 2024, plus $1,000,000 principal on January 1, 2024. Since this ($65,000) is pay a premium for them. The amount that the investors should be willing to pay for these The amount that the investors are willing to pay (and the issuer is willing to accept), $1,075,230, is the present value of the future cash flows discounted at the rate of interest that value because the coupon rate is equal to the effective rate. If the bonds had been issued at Here the effective rate of interest is less than the coupon rate, so the price of the bonds is greater than the maturity value. If the effective rate of interest was greater than the coupon (c)1.The use of the coupon rate for discounting bond obligations would give the face value of the bond at January 1, 2004, and at any interest-payment due thereafter. Although the 11-64 11-65 11-66 prior to the incurrence of the loss. However, the fact that a material loss has been incurred means of a footnote in the financial statements. The disclosure should contain the nature of the expenses incurred in future accounting periods relating to revenues recognized in the current period. As such, a liability has been incurred to honor the warranty at the same date as the recognition of the revenue. Based on prior experience or technical analysis, the occurrence of against this particular risk. A loss contingency may only be accrued if prior to the date of the 11-67 11-68 SHORT-TERM DEBTEffective (In millions)Interest Rate2001 2.60%$731 Non-U.S. dollar commercial paper3.92% ESOP debt guarantee5.62%32 Other borrowings7.25% 110 Total short-term debt$ 1,373 11-69 3M has a fairly strong liquidity position. The current ratio exceeds 1. The acid test ratio is below 1, possibly due to a slowing (c)3M provided the following discussion related to contingencies: defendants in a number of actions, governmental proceedings and claims involving products now or formerly manufactured and sold by the company. In some actions, the claimants seek damages as expenditures. The company has recorded liabilities, which matters. The company also has recorded receivables for the 11-70 11-71 LONG-TERM DEBTCurrency/Effective Fixed vs.InterestMaturity (In millions)FloatingRateDate2001 6.375% noteUSD Fixed6.38%2028$330 ESOP debt guaranteeUSD Fixed5.62%2003-2009271 noteUSD 1.76%2004200 noteUSD 1.87%2004150 1% EurobondJPY Fixed1.00%2003122 noteUSD Fixed4.57%2003100 rate noteUSD 1.67%2041100 0.795% noteJPY Fixed0.80%200376 Other borrowingsVarious2.25%2003-2040 171 debt$ 1,520 11-72 (e)3MÕs acid-test and current ratios are reported in part (b). The other 2 =5.99 times =3.97 times 11-73 coverage ratio = =.66 times =.37 times =18.63 times 11-74 Current ratio($6,745,759/$10,168,685) = .66($5,598,054/$4,484,687) = 1.25 maintain a current ratio of at least 2.0. In recent years, because 11-75 11-76 record less cash. Amortization of the larger discount will result in a outstanding. As a result of the additional $5.50 markdown, the 11-77 for, a recession to Òcool off the economyÓ and, thus, lower the then 11-78 Working capital$ (855,000,000) Working capital$ (1,258,000,000) The Coca-Cola Company explains its deficit in working capital in Our global presence and strong capital position afford us overall cost of borrowing. Our debt management policies, 11-79 PepsiCo, Inc.Coca-Cola Current cash debt$4,201$4,110 coverage ratio$4,998 + $4,795 PepsiCo, Inc.Coca-Cola Cash debt$4,201$4,110 coverage ratio$13,021 + $13,131 $5,853$7,171 Acid-test$683 + $966 + $2,142$1,866 + $68 + $1,882 ratio$4,998 Receivables$26,935$20,092 turnover$2,142 + $2,129 Inventory$10,754$6,044 turnover$1,310 + $1,192 11-80 of indebtedness owned by third parties in the amount of $436 investee bottlers. We do not consider it probable that we will be 11-81 constructed in Chicago, Illinois. The new Chicago office is Total payments $ 138 $ 111 $ 95 $ 57 $ 42 $162 $ 605 11-82 PepsiCo 3,0013,266 The fair value will vary from the historical cost carrying value due (f)1.Lower interest rates may be available in foreign countries. 2.Credit may be more readily available in foreign countries. foreign currency exchange rate fluctuations. Both PepsiCo and issuances. These swaps are generally entered into concurrently 11-83 (a)HoechstMerck 20,52810,229 391 + 14,3623,356 + 3,374 4,6285,328 Both of these companies have strong liquidity positions. While is driven by HoechstÕs high level of receivables. The companies (b)Most of the items reported as provisions could be recognized as liabilities for U.S. companies. The one exception is self-insurance loss provisions. Recording liabilities for self-insurance is not liabilities and a reduction in income in the period of the provision. 11-84 This affects comparisons of liquidity measures. For example, 11-85
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