Raffies Kids, a non-profit organization that provides aid to victims of domestic violence, lowincome families, and special-needs

Question:

Raffie’s Kids, a non-profit organization that provides aid to victims of domestic violence, lowincome families, and special-needs children has a 30-year, 5% mortgage on the existing building. The mortgage requires monthly payments of $3,000. Raffie’s bookkeeper is preparing financial statements for the board and in doing so, lists the mortgage balance of $287,000 under current liabilities because the board hopes to be able to pay the mortgage off in full next year. $20,000 of the mortgage principal will be paid next year if Raffie’s pays according to the mortgage agreement.

Requirement

1. The board members call you, their trusted CPA, to advise them on how Raffie’s Kids should report the mortgage on its balance sheet. Provide your recommendation and discuss the reason for your recommendation.


Financial Statements
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...
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Related Book For  book-img-for-question

Financial and Managerial Accounting

ISBN: 978-0132497978

3rd Edition

Authors: Horngren, Harrison, Oliver

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