Boom, Inc. is a manufacturer and retailer of household furniture. Your audit of the company's financial statements for the year ended December 31, 2022, discloses the following debt obligations of the company at the end of its reporting period. Boom's financial statements are authorized for issuance on March 6, 2023. 1. 2. 3. A P250,000 short-term obligation due on March 1, 2023. Its maturity could be extended to March 1, 2025, provided Boom agrees to provide additional collateral. On February 12, 2023, an agreement is reached to extend the loan's maturity to March 1, 2025. A short-term obligation of P3,600,000 in the form of notes payable due February 5, 2023. The company issued 75,000 ordinary shares for P36 per share on January 25, 2023. The proceeds from the issuance, plus P900,000 cash, were used to fully settle the debt on February 5, 2023. A long-term obligation of P4,000,000 due December 1, 2032. On November 10, 2022, Boom breaches a covenant on its debt obligation and the loan becomes payable on demand. An agreement is reached to provide a waiver of the breach on December 11, 2022. 4. A long-term obligation of P8,000,000. The loan is maturing over 4 years in the amount of P2,000,000 per year. The loan is dated September 1, 2022, and the first maturity date is September 1, 2023. 5. A debt obligation of P2,500,000 maturing on December 31, 2025. The debt is callable on demand by the lender any time.
Boom, Inc. is a manufacturer and retailer of household furniture. Your audit of the company's financial statements for the year ended December 31, 2022, discloses the following debt obligations of the company at the end of its reporting period. Boom's financial statements are authorized for issuance on March 6, 2023. 1. 2. 3. A P250,000 short-term obligation due on March 1, 2023. Its maturity could be extended to March 1, 2025, provided Boom agrees to provide additional collateral. On February 12, 2023, an agreement is reached to extend the loan's maturity to March 1, 2025. A short-term obligation of P3,600,000 in the form of notes payable due February 5, 2023. The company issued 75,000 ordinary shares for P36 per share on January 25, 2023. The proceeds from the issuance, plus P900,000 cash, were used to fully settle the debt on February 5, 2023. A long-term obligation of P4,000,000 due December 1, 2032. On November 10, 2022, Boom breaches a covenant on its debt obligation and the loan becomes payable on demand. An agreement is reached to provide a waiver of the breach on December 11, 2022. 4. A long-term obligation of P8,000,000. The loan is maturing over 4 years in the amount of P2,000,000 per year. The loan is dated September 1, 2022, and the first maturity date is September 1, 2023. 5. A debt obligation of P2,500,000 maturing on December 31, 2025. The debt is callable on demand by the lender any time.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PROBLEM 2 - AUDITING PROBLEM
1. What amount of current liabilities should be reported on the December 31, 2022, statement of financial position ?
2. What amount of noncurrent liabilities should be reported on the December 31, 2022, statement of financial position?
Transcribed Image Text:Problem 2
Boom, Inc. is a manufacturer and retailer of household furniture. Your audit of the company's financial
statements for the year ended December 31, 2022, discloses the following debt obligations of the company at
the end of its reporting period. Boom's financial statements are authorized for issuance on March 6, 2023.
1.
2.
4.
A P250,000 short-term obligation due on March 1, 2023. Its maturity could be extended to March 1,
2025, provided Boom agrees to provide additional collateral. On February 12, 2023, an agreement is
reached to extend the loan's maturity to March 1, 2025.
3.
A long-term obligation of P4,000,000 due December 1, 2032. On November 10, 2022, Boom breaches a
covenant on its debt obligation and the loan becomes payable on demand. An agreement is reached to
provide a waiver of the breach on December 11, 2022.
5.
A short-term obligation of P3,600,000 in the form of notes payable due February 5, 2023. The company
issued 75,000 ordinary shares for P36 per share on January 25, 2023. The proceeds from the issuance,
plus P900,000 cash, were used to fully settle the debt on February 5, 2023.
A long-term obligation of P8,000,000. The loan is maturing over 4 years in the amount of P2,000,000
per year. The loan is dated September 1, 2022, and the first maturity date is September 1, 2023.
A debt obligation of P2,500,000 maturing on December 31, 2025. The debt is callable on demand by the
lender any time.
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