d the proceeds of $1,440,000 from the stock issuance, along with $624,000 in cash to retire the short-term debt and associated accrued interest on February 5, 2018. Kingbird will issue its December 31, 2017 financial statements on February 25, 2018. Pina Corp. On December 31, 2017, Pina Corp. has $2,880,000 of short-term notes payable to Indiana Bank & Trust. The notes are due on January 31, 2018. Pina retired the notes, along with $192,000 in accrued interest, in full on January 31, 2018. On February 11, 2018, Pina obtained $4,320,000 in long-term financing from Terre Haute Bank & Trust. The new debt bears interest at 5 percent, with interest payments due annually. Pina will issue its December 31, 2017 financial statements on February 28, 2018
The controllers of Kingbird, Inc. and Pina Corp. both ask you whether their companies can reclassify short-term obligations as long-term. Here are the facts surrounding both companies’ short-term debt.
Kingbird, Inc. On December 31, 2017, Kingbird, Inc. has $1,920,000 of short-term debt in the form of notes payable to Michaels State Bank due February 5, 2018. On January 28, 2018, Kingbird issued 19,200 shares of common stock at $75 per share. Kingbird used the proceeds of $1,440,000 from the stock issuance, along with $624,000 in cash to retire the short-term debt and associated accrued interest on February 5, 2018. Kingbird will issue its December 31, 2017 financial statements on February 25, 2018.
Pina Corp. On December 31, 2017, Pina Corp. has $2,880,000 of short-term notes payable to Indiana Bank & Trust. The notes are due on January 31, 2018. Pina retired the notes, along with $192,000 in accrued interest, in full on January 31, 2018. On February 11, 2018, Pina obtained $4,320,000 in long-term financing from Terre Haute Bank & Trust. The new debt bears interest at 5 percent, with interest payments due annually. Pina will issue its December 31, 2017 financial statements on February 28, 2018.
Prepare partial balance sheets for Kingbird, Inc. and Pina Corp. at December 31, 2017, showing how both companies’ short-term debt should be presented. (Enter account name only and do not provide descriptive information.)
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Kingbird, Inc.
Partial choose the accounting period |
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select an opening name for section one :
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enter a balance sheet item
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$enter a dollar amount |
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Pina Corp.
Partial Balance Sheet choose the accounting period |
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select an opening section name :
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enter a balance sheet item
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$enter a dollar amount | ||
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enter a balance sheet item
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enter a dollar amount |
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