The Chief Executive Officer of Orion Enterprise has serious concerns about the company’s current or short term obligations. In a meeting with the CFO, the chief executive officer discussed his concerns, pointing out that the situation had negatively affected the company’s current ratio and acid test ratio. He sought the CFO’s advice as to whether some of the short term obligations could be reclassified as long term in order to alleviate the situation. They identified two short term obligations that could possibly be reclassified and the following actions were taken by the CFO. Note well: The company’s financial reporting date is March 31, 2019. Short Term Obligation – Wilson Finance Ltd. Orion’s short term obligation of $250,000 to Wilson Finance Ltd. becomes due on June 1, 2019. The parties reached an agreement that if Orion provides additional collateral, the obligation would be extended to June 1, 2021. The agreement was reached on May 1, 2019. The financial statements are authorized for issuance on July 1, 2019. Short Term Obligation – SDC Bank Orion’s short term obligation of $100,000 to SDC Bank becomes due on May 20, 2019. The bank agreed to extend the maturity date to May 20, 2020. This agreement was reached on March 10, 2019. The financial statements are authorized for issuance on July 1, 2019. Required Indicate how these transactions should be reported at March 31, 2019 on Orion’s Statement of Financial Position.
The Chief Executive Officer of Orion Enterprise has serious concerns about the company’s current or short term obligations. In a meeting with the CFO, the chief executive officer discussed his concerns, pointing out that the situation had negatively affected the company’s
reclassified and the following actions were taken by the CFO.
Note well: The company’s financial reporting date is March 31, 2019.
Short Term Obligation – Wilson Finance Ltd.
Orion’s short term obligation of $250,000 to Wilson Finance Ltd. becomes due on June 1, 2019. The parties reached an agreement that if Orion provides additional collateral, the obligation would be extended to June 1, 2021. The agreement was reached on May 1, 2019. The financial statements are authorized for issuance on July 1, 2019.
Short Term Obligation – SDC Bank
Orion’s short term obligation of $100,000 to SDC Bank becomes due on
May 20, 2019. The bank agreed to extend the maturity date to May 20, 2020. This agreement was reached on March 10, 2019. The financial statements are authorized for issuance on July 1, 2019.
Required
Indicate how these transactions should be reported at March 31, 2019 on Orion’s Statement of Financial Position.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
