Intercom Company is planning to refinance certain short-term obligations on a long term basis. The entity has a December 31 year-end and the 201 9 financial statements will be published on March 15, 2020. On December 31, 2019, before reclassification of short-term debt, the liabilities are: Current liabilities: Accounts Payable Note payable-bank Accrued expenses 7,000,000 12,000,000 4,000,000 Noncurrent liabilities: Mortgage payable Note payable-due in 2021 4,000,000 3,000,000 The entity intends to refinance P9,000,000 of theP 12,000,000 bank note payable on a long term basis Although the entire P12,000,000 is due on June 30, 2020, the bank has informally agreed to extend the maturity date forP 6,000,000 to June 30, 2021, if necessary. On January 31, 2020, the entity issued share capital forP 4,000,000, net issue costs and underwiting fees of P500,000. On February 15, 2020, the entity entered into a financing agreement with a financially capable commercial bank, permitting the entity to borrow up to P3,000,000.Borrowings available at the entity's option on April 1, 2020 will mature five years after the loan date. The entity uses the entire part of the current note payable and now intends to draw down the entire available commitment of the five-year year debt on April 1, 2020. Required: Prepare the liability section of the statement of financial position on December 31, 2019.
Intercom Company is planning to refinance certain short-term obligations on a long term basis. The entity has a December 31 year-end and the 201 9 financial statements will be published on March 15, 2020. On December 31, 2019, before reclassification of short-term debt, the liabilities are: Current liabilities: Accounts Payable Note payable-bank Accrued expenses 7,000,000 12,000,000 4,000,000 Noncurrent liabilities: Mortgage payable Note payable-due in 2021 4,000,000 3,000,000 The entity intends to refinance P9,000,000 of theP 12,000,000 bank note payable on a long term basis Although the entire P12,000,000 is due on June 30, 2020, the bank has informally agreed to extend the maturity date forP 6,000,000 to June 30, 2021, if necessary. On January 31, 2020, the entity issued share capital forP 4,000,000, net issue costs and underwiting fees of P500,000. On February 15, 2020, the entity entered into a financing agreement with a financially capable commercial bank, permitting the entity to borrow up to P3,000,000.Borrowings available at the entity's option on April 1, 2020 will mature five years after the loan date. The entity uses the entire part of the current note payable and now intends to draw down the entire available commitment of the five-year year debt on April 1, 2020. Required: Prepare the liability section of the statement of financial position on December 31, 2019.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 13C
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Transcribed Image Text:Intercom Company is planning to refinance certain short-term obligations on a long term basis. The entity has
a December 31 year-end and the 201 9 financial statements will be published on March 15, 2020.
On December 31, 2019, before reclassification of short-term debt, the liabilities are:
Current liabilities:
Accounts Payable
Note payable-bank
Accrued expenses
7,000,000
12,000,000
4,000,000
Noncurrent liabilities:
Mortgage payable
Note payable-due in 2021
4,000,000
3,000,000
The entity intends to refinance P9,000,000 of theP 12,000,000 bank note payable on a long term basis
Although the entire P12,000,000 is due on June 30, 2020, the bank has informally agreed to extend the
maturity date forP 6,000,000 to June 30, 2021, if necessary.
On January 31, 2020, the entity issued share capital forP 4,000,000, net issue costs and underwriting fees of
P500,000.
On February 15, 2020, the entity entered into a financing agreement with a financially capable commercial
bank, permitting the entity to borrow up to P3,000,000.Borrowings available at the entity's option on April 1,
2020 will mature five years after the loan date.
The entity uses the entire part of the current note payable and now intends to draw down the entire available
commitment of the five-year year debt on April 1, 2020.
Required: Prepare the liability section of the statement of financial position on December 31, 2019.
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