On December 31, 2020, Flounder Company has $7,024,000 of short-term debt in the form of notes payable to Gotham State Bank due in 2021. On December 28, 2021, Flounder enters into a refinancing agreement with Gotham that will permit it to borrow up to 68% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $6,021,000 in May to a high of $8,014,000 in October during the year 2021. The interest cost of the maturing short-term debt is 15%, and the new agreement calls for a fluctuating interest at 1% above the prime rate on notes due in 2022. Flounder’s December 31, 2020, balance sheet is issued on February 15, 2021.Prepare a partial balance sheet for Flounder at December 31, 2020, showing how its $7,024,000 of short-term debt should be presented.
On December 31, 2020, Flounder Company has $7,024,000 of short-term debt in the form of notes payable to Gotham State Bank due in 2021. On December 28, 2021, Flounder enters into a refinancing agreement with Gotham that will permit it to borrow up to 68% of the gross amount of its
Prepare a partial balance sheet for Flounder at December 31, 2020, showing how its $7,024,000 of short-term debt should be presented.
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