The controllers of Teal Mountain, Inc. and Indigo Corp. both ask you whether their companies can reclassify short-term obligations as long-term. Here are the facts surrounding both companies' short-term debt. Teal Mountain, Inc. On December 31, 2017, Teal Mountain, Inc. has $2,320,000 of short-term debt in the form of notes payable to Michaels State Bank due February 5, 2018. On January 28, 2018, Teal Mountain issued 23,200 shares of common stock at $75 per share. Teal Mountain used the proceeds of $1,740,000 from the stock issuance, along with $754,000 in cash to retire the short-term debt and associated accrued interest on February 5, 2018. Teal Mountain will issue its December 31, 2017 financial statements on February 25, 2018. Indigo Corp. On December 31, 2017, Indigo Corp. has $3,480,000 of short-term notes payable to Indiana Bank & Trust. The notes are due on January 31, 2018. Indigo retired the notes, along with $232,000 in accrued interest, in full on January 31, 2018. On February 11, 2018, Indigo obtained $5,220,000 in long-term financing from Terre Haute Bank & Trust. The new debt bears interest at 5 percent, with interest payments due annually. Indigo will issue its December 31, 2017 financial statements on February 28, 2018. Prepare partial balance sheets for Teal Mountain, Inc. and Indigo Corp. at December 31, 2017, showing how both companies' short- term debt should be presented. (Enter account name only and do not provide descriptive information.) Teal Mountain, Inc. Partial Balance Sheet December 31, 2017 LA
The controllers of Teal Mountain, Inc. and Indigo Corp. both ask you whether their companies can reclassify short-term obligations as long-term. Here are the facts surrounding both companies' short-term debt. Teal Mountain, Inc. On December 31, 2017, Teal Mountain, Inc. has $2,320,000 of short-term debt in the form of notes payable to Michaels State Bank due February 5, 2018. On January 28, 2018, Teal Mountain issued 23,200 shares of common stock at $75 per share. Teal Mountain used the proceeds of $1,740,000 from the stock issuance, along with $754,000 in cash to retire the short-term debt and associated accrued interest on February 5, 2018. Teal Mountain will issue its December 31, 2017 financial statements on February 25, 2018. Indigo Corp. On December 31, 2017, Indigo Corp. has $3,480,000 of short-term notes payable to Indiana Bank & Trust. The notes are due on January 31, 2018. Indigo retired the notes, along with $232,000 in accrued interest, in full on January 31, 2018. On February 11, 2018, Indigo obtained $5,220,000 in long-term financing from Terre Haute Bank & Trust. The new debt bears interest at 5 percent, with interest payments due annually. Indigo will issue its December 31, 2017 financial statements on February 28, 2018. Prepare partial balance sheets for Teal Mountain, Inc. and Indigo Corp. at December 31, 2017, showing how both companies' short- term debt should be presented. (Enter account name only and do not provide descriptive information.) Teal Mountain, Inc. Partial Balance Sheet December 31, 2017 LA
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The controllers of Teal Mountain, Inc. and Indigo Corp. both ask you whether their companies can reclassify short-term obligations as
long-term. Here are the facts surrounding both companies' short-term debt.
Teal Mountain, Inc. On December 31, 2017, Teal Mountain, Inc. has $2,320,000 of short-term debt in the form of notes payable to
Michaels State Bank due February 5, 2018. On January 28, 2018, Teal Mountain issued 23,200 shares of common stock at $75 per
share. Teal Mountain used the proceeds of $1,740,000 from the stock issuance, along with $754,000 in cash to retire the short-term
debt and associated accrued interest on February 5, 2018. Teal Mountain will issue its December 31, 2017 financial statements on
February 25, 2018.
Indigo Corp. On December 31, 2017, Indigo Corp. has $3,480,000 of short-term notes payable to Indiana Bank & Trust. The notes are
due on January 31, 2018. Indigo retired the notes, along with $232,000 in accrued interest, in full on January 31, 2018. On February
11, 2018, Indigo obtained $5,220,000 in long-term financing from Terre Haute Bank & Trust. The new debt bears interest at 5 percent,
with interest payments due annually. Indigo will issue its December 31, 2017 financial statements on February 28, 2018.
Prepare partial balance sheets for Teal Mountain, Inc. and Indigo Corp. at December 31, 2017, showing how both companies' short-
term debt should be presented. (Enter account name only and do not provide descriptive information.)
Teal Mountain, Inc.
Partial Balance Sheet
December 31, 2017
LA
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