Presented below are various account balances of K.D. Lang Inc.

Indicate whether each of the items below should be classified on December 31, 2017, as a current liability, a long-term liability, or under some other classification. Consider each one independently from all others; that is, do not assume that all of them relate to one particular business.

a. Unamortized premium on bonds payable, of which $3,000 will be amortized during the next year.
b. Bank loans payable of a winery, due March 10, 2021. (The product requires aging for 5 years before sale. Current assets are used to satisfy the debt.)
c. Serial bonds payable, $1,000,000, of which $200,000 are due each July 31.
d. Amounts withheld from employees' wages for income taxes.
e1. Notes payable due January 15, 2020. (operating cycle is greater than one year and current assets are used)
e2. Notes payable due January 15, 2020. (otherwise)
f. Credit balances in customers' accounts arising from returns and allowances after collection in full of account.
g. Bonds payable of $2,000,000 maturing June 30, 2018.
h. Overdraft of $1,000 in a bank account. (No other balances are carried at this bank.)
i. Deposits made by customers who have ordered goods.

A. Contra liability is a credit liability account for that has an explicit debit liability account. In that case, unamortized premium on bonds payable is a liability for which there is a premium, which is a debit liability. $3,000 is an expense, so it is an expense account.

B. Since the current year is 2017 and the maturity date is 2021, it is a long-term liability.

C. As $200,000 will be matured at the end of the year, it is a current liability. $800,000 is a long-term liability.

Req. D, E and F

D. Due to income tax purpose, employees' wages will be withhold for a specific time, it is a current liability.

E(1,2). Since the notes payable will be matured in 2020, it is a long-term liability. (as operating cycle is more than one year, it is a long-term liability. Whatever assets are used, they are long-term liabilities.

F. Accounts receivable is a current asset account. Therefore, if the balance is credit due to returns, it will not change the account.

Req. G, H and I

G. Since the bonds payable is matured at the end of this period, the entire amount will be current liability.

H. Bank Overdraft is a current liability account whatever the scenario pretends.

I. Since customers paid and goods have not been provided to them, it is a liability for the company. As it is related to products, it is a current liability.