On December 31, 2020, Unger Co., (which reports under ASPE), has $4,000,000 of short-term notes payable due on February 14, 2021. On February 2, 2021, Unger arranged a long-term loan which is based on borrowing against 70% of its inventory cost value which will vary between $3,000,000 in May and $4,440,000 in November. It intends to use proceeds to pay the short-term notes payable due on February 14, 2021 and to pay the balance of it in cash. The amount of the short-term notes payable that should be reported as current liabilities on the December 31, 2020 balance sheet that is issued on March 5, 2021 is a. $0. b. $1,600,000 c. $892,000. d. $1,900,000 e. $4,000,000.
On December 31, 2020, Unger Co., (which reports under ASPE), has $4,000,000 of short-term notes payable due on February 14, 2021. On February 2, 2021, Unger arranged a long-term loan which is based on borrowing against 70% of its inventory cost value which will vary between $3,000,000 in May and $4,440,000 in November. It intends to use proceeds to pay the short-term notes payable due on February 14, 2021 and to pay the balance of it in cash. The amount of the short-term notes payable that should be reported as current liabilities on the December 31, 2020 balance sheet that is issued on March 5, 2021 is a. $0. b. $1,600,000 c. $892,000. d. $1,900,000 e. $4,000,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
On December 31, 2020, Unger Co., (which reports under ASPE), has $4,000,000 of short-term notes payable due on February 14, 2021. On February 2, 2021, Unger arranged a long-term loan which is based on borrowing against 70% of its inventory cost value which will vary between $3,000,000 in May and $4,440,000 in November. It intends to use proceeds to pay the short-term notes payable due on February 14, 2021 and to pay the balance of it in cash. The amount of the short-term notes payable that should be reported as current liabilities on the December 31, 2020 balance sheet that is issued on March 5, 2021 is
a.
$0.
b.
$1,600,000
c.
$892,000.
d.
$1,900,000
e.
$4,000,000.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education