On February 10, 2012, after issuance of its financial statements for 2011, House Company entered into a financing agreement with Lebo Bank, allowing House Company to borrow up to $6,000,000 at any time through 2014. Amounts borrowed under the agreement bear interest at 2% above the bank's prime interest rate and mature two years from the date of loan. House Company presently has $2,250,000 of notes payable with First National Bank maturing March 15, 2012. The company intends to borrow $3,750,000 under the agreement with Lebo and liquidate the notes payable to First National. The agreement with Lebo also requires House to maintain a working capital level of $9,000,000 and prohibits the payment of dividends on common stock without prior approval by Lebo Bank. From the above information only, the total short-term debt of House Company as of the December 31, 2012 balance sheet date is a. $0. b. $2,250,000. c. $3,000,000. d. $6,000,000.
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On February 10, 2012, after issuance of its financial statements for 2011, House Company entered into
a financing agreement with Lebo Bank, allowing House Company to borrow up to $6,000,000 at any
time through 2014. Amounts borrowed under the agreement bear interest at 2% above the bank's prime
interest rate and mature two years from the date of loan. House Company presently has $2,250,000 of
notes payable with First National Bank maturing March 15, 2012. The company intends to borrow
$3,750,000 under the agreement with Lebo and liquidate the notes payable to First National. The
agreement with Lebo also requires House to maintain a
prohibits the payment of dividends on common stock without prior approval by Lebo Bank. From the
above information only, the total short-term debt of House Company as of the December 31, 2012
balance sheet date is
a. $0.
b. $2,250,000.
c. $3,000,000.
d. $6,000,000.
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