ch13 - SOLUTIONS TO B EXERCISES E13-1B (1015 minutes) (a)...

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Unformatted text preview: SOLUTIONS TO B EXERCISES E13-1B (1015 minutes) (a) Current liability. (b) Current liabilities or long-term liabilities as a deduction from face value of note. (c) Current liability. (d) Footnote disclosure. (e) Separate presentation in either current or long-term liability section. (f) Current liability. (g) Footnote disclosure (assume not probable and/or not reasonably estimable). (h) Current liability. (i) Current liability. (j) Current liability or long-term liability depending on term of warranty. (k) Current liability. (l) Current or noncurrent liability depending upon the time involved. (m) Current liability. (n) Current liability. (o) Current liability. (p) Current liability. 13-1 E13-2B (1520 minutes) (a) Sept. 1 Purchases.............................................. 125,000 Accounts Payable........................ 125,000 Oct. 1 Accounts Payable................................. 125,000 Notes Payable.............................. 125,000 Oct. 1 Cash........................................................ ................................................................ 125,000 Discount on Notes Payable.................. 17,000 Notes Payable.............................. 142,000 (b) Dec. 31 Interest Expense................................... 3,750 Interest Payable........................... 3,750 ($125,000 X 12% X 3/12) Dec. 31 Interest Expense................................... 4,250 Discount on Notes Payable........ 4,250 ($17,000 X 3/12) (c) (1) Note payable $125,000 Interest payable 3,750 $128,750 (2) Note payable $142,000 Less: Discount ($17,000 $4,250) 12,750 $129,250 13-2 E13-3B (1012 minutes) Hernandez Company Balance Sheet (partial) December 31, 2007 Current liabilities: Notes payable (Note 1) $ 500,000 Long-term debt: Notes payable refinanced in February 2008 (Note 1) 2,500,000 Note 1. Short-term debt refinanced. As of December 31, 2007, the company had notes payable totaling $3,000,000 due on February 2, 2008. These notes were refinanced on their due date to the extent of $2,500,000 received from the issuance of common stock on January 21, 2008. The balance of $500,000 was liquidated using current assets. OR Current liabilities: Notes payable (Note 1) $ 500,000 Long-term debt: Short-term debt expected to be refinanced (Note 1) 2,500,000 (Same Note 1 as above.) 13-3 E13-4B (2025 minutes) Gibson Company Balance Sheet (partial) December 31, 2007 Current liabilities: Notes payable (Note 1) $8,840,000 Long-term debt: Notes payable expected to be refinanced in 2008 (Note 1) 9,360,000 Note 1. Under a financing agreement with Blue Lagoon State Bank the Company may borrow up to 60% of the gross amount of its accounts receivable at an interest cost of 1% above the prime rate. The Company intends to issue notes maturing in 2010 to replace $9,360,000 of short-term, 15%, notes due in 2008. Because the amount that can be borrowed may range from $9,360,000 to $12,480,000, only $9,360,000 of the $18,200,000 of currently maturing debt has been reclassified as long-term debt....
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This note was uploaded on 05/10/2010 for the course ACC 440 BSB1658 taught by Professor Warwick during the Spring '09 term at University of Phoenix.

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ch13 - SOLUTIONS TO B EXERCISES E13-1B (1015 minutes) (a)...

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