On December 31, 2020, Novak Company has $6,975,000 of short-term debt in the form of notes payable to Gotham State Bank due in 2021. On December 28, 2020, Novak enters into a refinancing agreement with Gotham that will permit it to borrow up to 67% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $5,983,000 in May to a high of $7,983,000 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 2025. Novak's December 31, 2020, balance sheet is issued on February 15, 2021. Prepare a partial balance sheet for Novak at December 31, 2020, showing how its $6,975,000 of short-term debt should be presented. (Enter account name only and do not provide descriptive information.) NOVAK COMPANY Partial Balance Sheet
On December 31, 2020, Novak Company has $6,975,000 of short-term debt in the form of notes payable to Gotham State Bank due in 2021. On December 28, 2020, Novak enters into a refinancing agreement with Gotham that will permit it to borrow up to 67% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $5,983,000 in May to a high of $7,983,000 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 2025. Novak's December 31, 2020, balance sheet is issued on February 15, 2021. Prepare a partial balance sheet for Novak at December 31, 2020, showing how its $6,975,000 of short-term debt should be presented. (Enter account name only and do not provide descriptive information.) NOVAK COMPANY Partial Balance Sheet
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 11E
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![On December 31, 2020, Novak Company has $6,975,000 of short-term debt in the form of notes payable to Gotham State Bank due in
2021. On December 28, 2020, Novak enters into a refinancing agreement with Gotham that will permit it to borrow up to 67% of the
gross amount of its accounts receivable. Receivables are expected to range between a low of $5,983,000 in May to a high of
$7,983,000 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 2025. Novak's December 31, 2020, balance sheet is issued on
February 15, 2021.
Prepare a partial balance sheet for Novak at December 31, 2020, showing how its $6,975,000 of short-term debt should be presented.
(Enter account name only and do not provide descriptive information.)
NOVAK COMPANY
Partial Balance Sheet
V
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe0037993-fc06-4e9a-b4ca-eff80ad003fe%2F8cf88d5f-393c-48a5-82ca-e78c07beb727%2Fhl2m4jt_processed.png&w=3840&q=75)
Transcribed Image Text:On December 31, 2020, Novak Company has $6,975,000 of short-term debt in the form of notes payable to Gotham State Bank due in
2021. On December 28, 2020, Novak enters into a refinancing agreement with Gotham that will permit it to borrow up to 67% of the
gross amount of its accounts receivable. Receivables are expected to range between a low of $5,983,000 in May to a high of
$7,983,000 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 2025. Novak's December 31, 2020, balance sheet is issued on
February 15, 2021.
Prepare a partial balance sheet for Novak at December 31, 2020, showing how its $6,975,000 of short-term debt should be presented.
(Enter account name only and do not provide descriptive information.)
NOVAK COMPANY
Partial Balance Sheet
V
$
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