Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 9, Problem 1C
To determine
Indicate the assumptions that a Corporation W should use to exclude the previously mentioned items from the December 31, 2019, current liabilities and the
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Canton Cave Company provided the following schedule of liabilities on December 31, 2019:
Accounts payable
Notes payable-bank
Interest payable
Mortgage payable-10%
Bonds payable
*Bank notes payable include two separate notes payable to First Bank
> AP3, 000,000, 10% note issued March 1, 2018, payable on demand. Interest is payable every six
6,500,000
8,000,000
150,000
2,000,000
4,000,000
months.
> A one-year, P5,000,000, 11% note issued January 2, 2019. On December 31, 2019, Canton Cave
negotiated a written agreement with First Bank to replace the note with a 2-year, P5,000,000, 10%
note issued January 2, 2020.
*The 10% mortgage note was issued October 1, 2016 with a term of 10 years.
> Terms of the note give the holder the right to demand immediate payment if the entity fails to make a
monthly interest within 10 days of the date the payment is due.
On December 31, 2019, Canton Cave is three months behind in paying its required initial payment.
The bonds payable are 10-year, 8% bonds,…
Preparing a Debt Disclosure
As of December 31, 2020, Dole Company’s long-term debt consisted of the following:
$146,050—Unsecured note payable to bank due 2021.
$517,500—Unsecured note payable to bank due 2023.
$690,000—Unsecured note payable to bank due 2025.
$103,500—Secured mortgage payable to bank due in equal installments 2021 through 2025.
$184,000—Secured note payable to bank due in 2026.
Prepare the required financial statement disclosure at December 31, 2020, indicating the amounts due in each of the next five years and thereafter.
NotePayable
Year 12021
Year 22022
Year 32023
Year 42024
Year 52025
Thereafter
$146,050
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517,500
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690,000
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103,500
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184,000
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A debtor firm’s 12/31/21 statement of financial position is to be issued of 4/15/22. A long-term obligation contracted in 2019 for settlement on 1/15/22 was extinguished through cash payment on its due date. On 1/20/22, a 5-year note was issued to replace the cash used up for the payment made on 1/15/22. Which of the following statements is correct?
Group of answer choices
The original obligation should be reported in the 2021 statement of financial position as a current liability because the entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
The new obligation entered into on 1/20/22 should be reported in the 2022 statement of financial position as a non-current liability because it is due to be settled beyond twelve months after the reporting period.
The original obligation should be reported in the 2022 statement of financial position as a non-current liability because the entity does have an…
Chapter 9 Solutions
Intermediate Accounting: Reporting And Analysis
Ch. 9 - Prob. 1GICh. 9 - Prob. 2GICh. 9 - List the three characteristics of a liability....Ch. 9 - Prob. 4GICh. 9 - Prob. 5GICh. 9 - Prob. 6GICh. 9 - Prob. 7GICh. 9 - Prob. 8GICh. 9 - How does materiality affect the accounting for...Ch. 9 - Distinguish between an interest-bearing note and a...
Ch. 9 - Prob. 11GICh. 9 - How should long-term debt that is callable by a...Ch. 9 - Prob. 13GICh. 9 - Prob. 14GICh. 9 - Prob. 15GICh. 9 - Prob. 16GICh. 9 - Prob. 17GICh. 9 - Prob. 18GICh. 9 - Prob. 19GICh. 9 - Prob. 20GICh. 9 - Prob. 21GICh. 9 - Prob. 22GICh. 9 - Prob. 23GICh. 9 - Prob. 24GICh. 9 - Prob. 25GICh. 9 - Prob. 26GICh. 9 - Prob. 27GICh. 9 - Prob. 28GICh. 9 - The balance in Ashwood Companys accounts payable...Ch. 9 - On September 1, 2019, a company borrowed cash and...Ch. 9 - When a company receives a deposit from a customer...Ch. 9 - Bronson Apparel Inc. operates a retail store and...Ch. 9 - Prob. 5MCCh. 9 - Prob. 6MCCh. 9 - Prob. 7MCCh. 9 - Prob. 8MCCh. 9 - Prob. 9MCCh. 9 - Prob. 10MCCh. 9 - Rescue Sequences LLC purchased inventory by...Ch. 9 - Use the same information in RE9-1 except that the...Ch. 9 - Cee Co.s fiscal year begins April 1. At the...Ch. 9 - Prob. 4RECh. 9 - Prob. 5RECh. 9 - Smith Company is required to charge customers an...Ch. 9 - Wallace Corporation summarizes the following...Ch. 9 - Borat Company gives annual bonuses after the end...Ch. 9 - Prob. 9RECh. 9 - Prob. 10RECh. 9 - After years of experience, Dilcort Company...Ch. 9 - Prob. 1ECh. 9 - Notes Payable On December 1, 2019, Insto Photo...Ch. 9 - Non-Interest-Bearing Notes Payable On November 16,...Ch. 9 - Discounting of Notes Payable On October 30, 2019,...Ch. 9 - Disclosure of Debt On May 1, 2019, Ramden Company...Ch. 9 - Short-Term Debt Expected to Be Refinanced On...Ch. 9 - Short-Term Debt Expected to Be Refinanced On...Ch. 9 - Refundable Deposits Party Warehouse Inc. rents a...Ch. 9 - Prob. 9ECh. 9 - Property Taxes Family Practice Associates has an...Ch. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17ECh. 9 - Prob. 18ECh. 9 - Prob. 19ECh. 9 - Prob. 20ECh. 9 - Cash Rebates On January 1, 2020, Fro-Yo Inc. began...Ch. 9 - Prob. 22ECh. 9 - Prob. 1PCh. 9 - Notes Payable and Effective Interest On November...Ch. 9 - Trade Note Transactions Adjusto Corporation (which...Ch. 9 - Prob. 4PCh. 9 - Short-Term Debt Expected to Be Refinanced On...Ch. 9 - Non-Interest-Bearing Note Payable: Present Value...Ch. 9 - Prob. 7PCh. 9 - Prob. 8PCh. 9 - Payroll and Payroll Taxes Bailey Dry Cleaners has...Ch. 9 - Bonus Obligation and Income Tax Expense James...Ch. 9 - Prob. 11PCh. 9 - Contingencies Fallon Company, a toy manufacturer...Ch. 9 - Prob. 13PCh. 9 - Assurance-Type Warranty Clean-All Inc. sells...Ch. 9 - Prob. 15PCh. 9 - Premium Obligation Yummy Cereal Company is...Ch. 9 - Comprehensive Selected transactions of Lizard Lick...Ch. 9 - Comprehensive Selected transactions of Shadrach...Ch. 9 - Prob. 1CCh. 9 - Prob. 2CCh. 9 - Prob. 3CCh. 9 - Pending Damage Suit Disclosure On December 15,...Ch. 9 - Various Contingency Issues Skinner Company has the...Ch. 9 - Prob. 6CCh. 9 - Prob. 7CCh. 9 - Prob. 8CCh. 9 - Prob. 10C
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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.Similar questions
- Restructuring (Debtor) Oakwood Corporation is delinquent on a 2,400,000, 10% note to Second National Bank that was due January 1, 2019. At that time, Oakwood owed the principal amount plus 34,031.82 of accrued interest. Oakwood enters into a debt restructuring agreement with the bank on January 2, 2019. Required: Prepare the journal entries for Oakwood to record the debt restructuring agreement and all subsequent interest payments assuming the following independent alternatives: 1. The bank extends the repayment date to December 31, 2022, forgives the accrued interest owed, reduces the principal by 200,000, and reduces the interest rate to 8%. 2. The bank extends the repayment date to December 31, 2022, forgives the accrued interest owed, reduces the principal by 200,000, and reduces the interest rate to 1%. 3. The bank accepts 160,000 shares of Oakwoods 55 par value common stock, which is currently selling for 14.50 per share, in full settlement of the debt. 4. The bank accepts land with a fair value of 2,300,000 in full settlement of the debt. The land is being carried on Oakwoods books at a cost of 2,200,000.arrow_forwardOn January 1, 2019, Northfield Corporation becomes delinquent on a 100,000, 14% note to First National Bank, on which 16,651 of interest has accrued. On January 2, 2019, the bank agrees to restructure the note. It forgives the accrued interest, extends the repayment date to December 31, 2021, and reduces the interest rate to 10%. Required: Prepare a schedule for Northfield to compute the annual interest expense in regard to the preceding note for each year of the restructuring agreement.arrow_forwardShort-Term Debt Expected to Be Refinanced On December 31, 2019, Excello Electric Company had 1 million of short-term notes payable due February 7, 2020. Excello expected to refinance these notes on a long-term basis. On January 15, 2020, the company issued bonds with a face value of 900,000 for 882,000. On January 22, 2020, the proceeds from the bond issue plus additional cash held by Excello on December 31, 2019, were used to liquidate the 1 million of short-term notes. The December 31, 2019, balance sheet is issued on February 12, 2020. Required: Prepare a partial balance sheet as of December 31, 2019, showing how the 1 million of short-term notes payable should be disclosed. Include an appropriate footnote for proper disclosure.arrow_forward
- Problem Reporting Long-Term Debt Fridley Manufacturings accounting records reveal the following account balances after adjusting entries are made on December 31, 2020. Required: Prepare the current liabilities and long-term debt portions of Fridleys balance sheet at December 31, 2020. Provide a separate line item for each issue (do not combine separate bonds or notes payable), but some items may need to be split into more than one item. Accounts payable $ 62,500 Bonds payable (9.4%, due in 2027) 800,000 Lease liability* 41,500 Bonds payable (8.7%, due in 2023) 50,000 Deferred tax liability* 133.400 Discount on bonds payable (94%, due in 2027) 12,600 Income taxes payable 26,900 * Long term liability Interest payable $ 38,700 Installment note payable (8%, equal installments due 2021 to 2024) 120,000 Notes payable (7.8%, due in 2025) 400,000 Premium on notes payable (7.8%, due in 2025) 6, [00 Note payable, 4% $50,000 face amount. due in 2026 (net of discount) 31,900arrow_forwardDisclosure of Debt On May 1, 2019, Ramden Company issues 13% bonds with a face value of 2 million. The bond contract calls for retirement of the bonds in periodic installments of 200,000, starting on May 1, 2020, and continuing on each May 1 thereafter until all bonds are retired. Required: How would the preceding information appear in Ramdens balance sheets on December 31, 2019, and 2020?arrow_forwardRefer to the information in RE13-5. Assume that on December 31, 2019, the investment in Smith Corporation bonds has a market value of 12,500. Prepare the year-end journal entry to record the unrealized gain or loss.arrow_forward
- On August 1, 2020, a company borrowed cash and signed a one-year interest-bearing note on which both the face value and interest are payable on August 1, 2021. Howwill the note payable and the related interest be dlassified in the December 31, 2020, balance sheet? Note Payable Interest Payable Current Noncurrent liability liability Current Current liability liability Noncurrent Not shown liability Noncurrent Current liability liabilityarrow_forwardOn September 1, 2019, a company borrowed cash and signed a 1-year,interest-bearing note on which both the principal and interest arepayable on September 1, 2021. How will the note payable and the relatedinterest be classified in the December 31, 2019, balance sheet? Note Payable Accrued Interest a. Current liabilityb. Noncurrent liabilityc. Current liabilityd. Noncurrent liability Noncurrent liabilityCurrent liabilityCurrent liabilityNo entryarrow_forwardJazz Company lends Sullivan Company $30,000 on August 1, 2019 in exchange of a 9-month, 12% interest note. If Jazz Company accrued interest on its December 31, 2019 year-end, what is the financial statement effect of the collection of the note and interest at its maturity date? Select one: a. BALANCE SHEET INCOME STATEMENT ASSETS = LIABILITIES + STOCKHOLDER'SEQUITY REVENUE - EXPENSE Cash InterestReceivable NotesReceivable Retained Earnings InterestIncome A) +32,700 -1,200 -30,000 +1,500 +1,500 b. BALANCE SHEET INCOME STATEMENT ASSETS = LIABILITIES + STOCKHOLDER'SEQUITY REVENUE - EXPENSE Cash InterestReceivable NotesReceivable Retained Earnings InterestIncome B) -32,700 +1,500 +30,000 -1,200 -1,200 c. BALANCE SHEET INCOME STATEMENT ASSETS = LIABILITIES + STOCKHOLDER'SEQUITY REVENUE - EXPENSE Cash InterestReceivable NotesReceivable Retained Earnings InterestIncome…arrow_forward
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