On December 31, 2020, Mountain Co. has notes payable due

On December 31, 2020, Mountain Co. has notes payable due on June 4, 2021 for a total of $6,000,000. On January 10, 2021, Mountain arranged for a line of credit with Sequoia Bank which allows Mountain to borrow up to $5,000,000 at one percent above the prime rate for three years. On February 2, 2021, Mountain borrowed $4,500,000 from Sequoia Bank and used $1,000,000 of additional cash to liquidate $5,500,000 of the short-term notes payable. The amount of the notes payable that should be reported as current liabilities on Mountain Co.'s December 31, 2020 balance sheet, which is issued on March 5, 2021, is:

Multiple Choice

  • $500,000

  • $1,500,000

  • 2,000,000

  • $1,000,000


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