On December 31, 2019, Carrboro Textile Company had short term debt in the form of notes payable
Question:
On December 31, 2019, Carrboro Textile Company had short term debt in the form of notes payable totaling $600,000. These notes were due on June 1, 2020. Carrboro expected to refinance these notes on a long-term basis. On February 1, 2020, Carrboro entered into an agreement with Worldwide Life Insurance Company whereby Worldwide will lend Carrboro $450,000, payable in 5 years at 12%. The money will be available to Carrboro on May 20, 2020. Carrboro issues its December 31, 2019, year-end financial statements on March 2, 2020.
Required:
1. Show how the $600,000 notes payable will be classified on Carrboro Textile’s balance sheet on December 31, 2019.
2. Next Level What is necessary in order for a company to exclude short-term debt that is expected to be refinanced on a long-term basis from the current liability classification?
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
1 Note 1 On February 1 2020 Carrboro entered into an agreement with Worldwide Life Insurance Comp...View the full answer
Intermediate Accounting Reporting and Analysis
ISBN: 978-1337788281
3rd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
