At December 21, 2024, Cordova Leather's labilities include the following: 1. $16.9 million of noncallable 8% notes were Issued for $16.9 million on August 31, 1994. The notes mature on July 31, 2025. Sufficient cash is expected to be available to retire the notes at maturity. 2. $31.9 million of 7% notes were issued for $31.9 million on May 31, 2014. The notes mature on May 31, 2027, but investors have the option of calling demanding payment on) the notes on June 30, 2025. However, the call option is not expected to be exercised, given prevailing market conditions. 3. $19.9 million of 9% notes are due on March 13, 2026. A debt covenant requires Cordova to maintain current assets at least equal 150% of its current labilities. On December 31. 2024, Cordova is in violation of this covenant. Cordova obtained a walver from Village Bank until June 2025, having convinced the bank that the company's normal 2 to 1 ratio of current assets to current labilities will be reestablished during the first half of 2025. For each of the three liabilities, indicate how they should be reported on the balance sheet for the year ended December 31, 2024. Note: Enter your answers in millions (Le.. 10,100,000 should be entered as 10). Liability type Amount million million million
At December 21, 2024, Cordova Leather's labilities include the following: 1. $16.9 million of noncallable 8% notes were Issued for $16.9 million on August 31, 1994. The notes mature on July 31, 2025. Sufficient cash is expected to be available to retire the notes at maturity. 2. $31.9 million of 7% notes were issued for $31.9 million on May 31, 2014. The notes mature on May 31, 2027, but investors have the option of calling demanding payment on) the notes on June 30, 2025. However, the call option is not expected to be exercised, given prevailing market conditions. 3. $19.9 million of 9% notes are due on March 13, 2026. A debt covenant requires Cordova to maintain current assets at least equal 150% of its current labilities. On December 31. 2024, Cordova is in violation of this covenant. Cordova obtained a walver from Village Bank until June 2025, having convinced the bank that the company's normal 2 to 1 ratio of current assets to current labilities will be reestablished during the first half of 2025. For each of the three liabilities, indicate how they should be reported on the balance sheet for the year ended December 31, 2024. Note: Enter your answers in millions (Le.. 10,100,000 should be entered as 10). Liability type Amount million million million
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:At December 21, 2024, Cordova Leather's labilities include the following:
1. $16.9 million of noncallable 8% notes were Issued for $16.9 million on August 31, 1994. The
notes mature on July 31, 2025. Sufficient cash is expected to be available to retire the notes
at maturity.
2. $31.9 million of 7% notes were issued for $31.9 million on May 31, 2014. The notes mature
on May 31, 2027, but investors have the option of calling demanding payment on) the notes
on June 30, 2025. However, the call option is not expected to be exercised, given prevailing
market conditions.
3. $19.9 million of 9% notes are due on March 13, 2026. A debt covenant requires Cordova to
maintain current assets at least equal 150% of its current labilities. On December 31. 2024,
Cordova is in violation of this covenant. Cordova obtained a walver from Village Bank until
June 2025, having convinced the bank that the company's normal 2 to 1 ratio of current
assets to current labilities will be reestablished during the first half of 2025.
For each of the three liabilities, indicate how they should be reported on the balance sheet for the
year ended December 31, 2024.
Note: Enter your answers in millions (Le.. 10,100,000 should be entered as 10).
Liability type
Amount
million
million
million
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