On February 10, 2021, after issuance of its financial statements for 2020, Sunland Company entered into a financing agreement with Cleveland Bank, allowing Sunland Company to borrow up to $8060000 at any time through 2023. Amounts borrowed under the agreement bear interest at 3% above the bank's prime interest rate and mature two years from the date of loan. Sunland Company presently has $3100000 of notes payable with Star National Bank maturing March 15, 2021. The company intends to borrow $4910000 under the agreement with Cleveland and liquidate the notes payable to Star National Bank. The agreement with Cleveland also requires Sunland to maintain a working capital level of $12050000 and prohibits the payment of dividends on common stock without prior approval by Cleveland Bank. From the above information only, the total short-term debt of Sunland Company as of the December 31, 2020 balance sheet date is O $8060000. ● $0. ● $3990000. $3100000.
On February 10, 2021, after issuance of its financial statements for 2020, Sunland Company entered into a financing agreement with Cleveland Bank, allowing Sunland Company to borrow up to $8060000 at any time through 2023. Amounts borrowed under the agreement bear interest at 3% above the bank's prime interest rate and mature two years from the date of loan. Sunland Company presently has $3100000 of notes payable with Star National Bank maturing March 15, 2021. The company intends to borrow $4910000 under the agreement with Cleveland and liquidate the notes payable to Star National Bank. The agreement with Cleveland also requires Sunland to maintain a working capital level of $12050000 and prohibits the payment of dividends on common stock without prior approval by Cleveland Bank. From the above information only, the total short-term debt of Sunland Company as of the December 31, 2020 balance sheet date is O $8060000. ● $0. ● $3990000. $3100000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![On February 10, 2021, after issuance of its financial statements for 2020, Sunland Company entered into a financing agreement
with Cleveland Bank, allowing Sunland Company to borrow up to $8060000 at any time through 2023. Amounts borrowed
under the agreement bear interest at 3% above the bank's prime interest rate and mature two years from the date of loan.
Sunland Company presently has $3100000 of notes payable with Star National Bank maturing March 15, 2021. The company
intends to borrow $4910000 under the agreement with Cleveland and liquidate the notes payable to Star National Bank. The
agreement with Cleveland also requires Sunland to maintain a working capital level of $12050000 and prohibits the payment of
dividends on common stock without prior approval by Cleveland Bank. From the above information only, the total short-term
debt of Sunland Company as of the December 31, 2020 balance sheet date is
$8060000.
$0.
$3990000.
$3100000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3aff2365-9f44-4770-b8e3-e2ed0988bbf7%2Fa9d68057-4e5e-44dd-a282-e61b286b04b1%2Fymtacv_processed.png&w=3840&q=75)
Transcribed Image Text:On February 10, 2021, after issuance of its financial statements for 2020, Sunland Company entered into a financing agreement
with Cleveland Bank, allowing Sunland Company to borrow up to $8060000 at any time through 2023. Amounts borrowed
under the agreement bear interest at 3% above the bank's prime interest rate and mature two years from the date of loan.
Sunland Company presently has $3100000 of notes payable with Star National Bank maturing March 15, 2021. The company
intends to borrow $4910000 under the agreement with Cleveland and liquidate the notes payable to Star National Bank. The
agreement with Cleveland also requires Sunland to maintain a working capital level of $12050000 and prohibits the payment of
dividends on common stock without prior approval by Cleveland Bank. From the above information only, the total short-term
debt of Sunland Company as of the December 31, 2020 balance sheet date is
$8060000.
$0.
$3990000.
$3100000.
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