On January 1, 2019, Pigero Company took 3-year, P4,000,000 loan from a bank. The loan agreement requires Pigero to maintain a current ratio of 2:1. If the current ratio falls below 2:1, the loan becomes payable on demand. As of December 31, 2019, Pigero’s current ratio is 1.8:1. On December 31, 2019, the bank agreed not to collect the loan in 2020 and gave Pigero 12 months to rectify the breach of loan agreement. How much is presented as current liability in relation to the loan in Pigero’s 2019 year-end financial statement?
On January 1, 2019, Pigero Company took 3-year, P4,000,000 loan from a bank. The loan agreement requires Pigero to maintain a current ratio of 2:1. If the current ratio falls below 2:1, the loan becomes payable on demand. As of December 31, 2019, Pigero’s current ratio is 1.8:1. On December 31, 2019, the bank agreed not to collect the loan in 2020 and gave Pigero 12 months to rectify the breach of loan agreement. How much is presented as current liability in relation to the loan in Pigero’s 2019 year-end financial statement?
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 61P
Related questions
Question
On January 1, 2019, Pigero Company took 3-year, P4,000,000 loan from a bank. The
loan agreement requires Pigero to maintain a
falls below 2:1, the loan becomes payable on demand. As of December 31, 2019,
Pigero’s current ratio is 1.8:1. On December 31, 2019, the bank agreed not to collect
the loan in 2020 and gave Pigero 12 months to rectify the breach of loan agreement.
How much is presented as current liability in relation to the loan in Pigero’s 2019
year-end financial statement?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College