Pam, Inc. has P1,000,000 notes payable due on June 15, 20x6. On December 31, 20x5, Pam signed an agreement to roll over the P1,000,000 note on a long-term basis. Under the agreement, the amount that can be rolled-over cannot exceed 80% of the value of the collateral Pam was providing. As of December 31, 20x5, the value of the collateral was P1,200,000 and was not expected to fall below this amount during 20x6. In its December 31, 20x5, balance sheet, Pam should classify the notes payable as Long-term 800,000 Short-term Long-term 1,000,000 Short-term a. 0 b. 40,000 c. 200,000 960,000 d. 1.000.000 "A
Pam, Inc. has P1,000,000 notes payable due on June 15, 20x6. On December 31, 20x5, Pam signed an agreement to roll over the P1,000,000 note on a long-term basis. Under the agreement, the amount that can be rolled-over cannot exceed 80% of the value of the collateral Pam was providing. As of December 31, 20x5, the value of the collateral was P1,200,000 and was not expected to fall below this amount during 20x6. In its December 31, 20x5, balance sheet, Pam should classify the notes payable as Long-term 800,000 Short-term Long-term 1,000,000 Short-term a. 0 b. 40,000 c. 200,000 960,000 d. 1.000.000 "A
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:4. Pam, Inc. has P1,000,000 notes payable due on June 15, 20x6.
On December 31, 20x5, Pam signed an agreement to roll over
the P1,000,000 note on a long-term basis. Under the agreement,
the amount that can be rolled-over cannot exceed 80% of the
value of the collateral Pam was providing. As of December 31,
20x5, the value of the collateral was P1,200,000 and was not
expected to fall below this amount during 20x6. In its
December 31, 20x5, balance sheet, Pam should classify the
notes payable as
Short-term
Short-term
Long-term
Long-term
1,000,000
960,000
a. 0
800,000
b. 40,000
(AICPA-adapted)
c. 200,000
d. 1,000,000
0.
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