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Compute the total current liabilities on December 31, 2020.

Compute the total current liabilities on December 31, 2020.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 1-7 (IAA) Cavalier Company provided the following information on December 31, 2020: Accounts payable Notes payable -bank Interest payable Mortgage note payable – 10% Bonds payable 6,500,000 8,000,000 150,000 2,000,000 4,000,000 Bank notes payable include two separate notes payable to First Bank. A P3,000,000, 10% note issued March 1, 2019, payable on demand. Interest is payable every six months. A one-year, P5,000,000, 11% note issued January 2, 2020. On December 31, 2020, the entity negotiated a written agreement with First Bank to replace the note with a 2-year, P5,000,000, 10% note to be issued January 2, 2021. The 10% mortgage note was issued October 1, 2019 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 payment within 10 days of the date the payment is due. On December 31, 2020, the entity is three months behind in paying the required interest payment. The bonds payable are 10-year, 8% bonds, issued June 30, 2011. Interest is payable semiannually on June 30 and December 31. Required: Compute the total current liabilities on December 31, 2020.
Transcribed Image Text:Problem 1-7 (IAA) Cavalier Company provided the following information on December 31, 2020: Accounts payable Notes payable -bank Interest payable Mortgage note payable – 10% Bonds payable 6,500,000 8,000,000 150,000 2,000,000 4,000,000 Bank notes payable include two separate notes payable to First Bank. A P3,000,000, 10% note issued March 1, 2019, payable on demand. Interest is payable every six months. A one-year, P5,000,000, 11% note issued January 2, 2020. On December 31, 2020, the entity negotiated a written agreement with First Bank to replace the note with a 2-year, P5,000,000, 10% note to be issued January 2, 2021. The 10% mortgage note was issued October 1, 2019 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 payment within 10 days of the date the payment is due. On December 31, 2020, the entity is three months behind in paying the required interest payment. The bonds payable are 10-year, 8% bonds, issued June 30, 2011. Interest is payable semiannually on June 30 and December 31. Required: Compute the total current liabilities on December 31, 2020.
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