Victory, Inc. is a manufacturer and retailer of household furniture. Your audit of the company's financial statements for the year ended December 31, 20x1, discloses the following debt obligations of the company at the end of the reporting period. a. A P200,000 short-term obligation due on March 1, 20x2. Its maturity could be extended to March 1, 20x4, provided Victory agrees to provide additional collateral. On February 12, 20x2, an agreement is reached to extend the loan's maturity to March 1,20x4. b. A short-term obligation of P4,200,000 in the form of notes payable due February 5, 20x2. The company issued 80,000 ordinary shares for P40 per share on January 25, 20x2. The proceeds form the issuance, plus P1,000,000 cash, were used to settle the debt on February 5, 20x2. c. A long-term obligation of P1,500,000 due on December 31, 2x11. On November 10, 20x1, Victory breaches a covenant on its debt obligation, and the loan becomes payable on demand. An agreement is reached to provide a waiver of the breach on January 11, 20x2. d. A long-term obligation of P4,000,000. The loan is maturing over eight (8) years, amounting to P500,000 annually. The loan is dated September 1, 20x1, and the first maturity date is September 1, 20х2. A debt obligation of P600,000 maturing on December 31, 20x4. The debt is callable on demand by e. the londer ot o ny timo
Victory, Inc. is a manufacturer and retailer of household furniture. Your audit of the company's financial statements for the year ended December 31, 20x1, discloses the following debt obligations of the company at the end of the reporting period. a. A P200,000 short-term obligation due on March 1, 20x2. Its maturity could be extended to March 1, 20x4, provided Victory agrees to provide additional collateral. On February 12, 20x2, an agreement is reached to extend the loan's maturity to March 1,20x4. b. A short-term obligation of P4,200,000 in the form of notes payable due February 5, 20x2. The company issued 80,000 ordinary shares for P40 per share on January 25, 20x2. The proceeds form the issuance, plus P1,000,000 cash, were used to settle the debt on February 5, 20x2. c. A long-term obligation of P1,500,000 due on December 31, 2x11. On November 10, 20x1, Victory breaches a covenant on its debt obligation, and the loan becomes payable on demand. An agreement is reached to provide a waiver of the breach on January 11, 20x2. d. A long-term obligation of P4,000,000. The loan is maturing over eight (8) years, amounting to P500,000 annually. The loan is dated September 1, 20x1, and the first maturity date is September 1, 20х2. A debt obligation of P600,000 maturing on December 31, 20x4. The debt is callable on demand by e. the londer ot o ny timo
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Case 6: VICTORY, INC.
Victory, Inc. is a manufacturer and retailer of household furniture. Your audit of the company's financial
statements for the year ended December 31, 20x1, discloses the following debt obligations of the company
at the end of the reporting period.
a. A P200,000 short-term obligation due on March 1, 20x2. Its maturity could be extended to March
1, 20x4, provided Victory agrees to provide additional collateral. On February 12, 20x2, an
agreement is reached to extend the loan's maturity to March 1, 20x4.
b. A short-term obligation of P4,200,000 in the form of notes payable due February 5, 20x2. The
company issued 80,000 ordinary shares for P40 per share on January 25, 20x2. The proceeds
form the issuance, plus P1,000,000 cash, were used to settle the debt on February 5, 20x2.
c. A long-term obligation of P1,500,000 due on December 31, 2x11. On November 10, 20x1, Victory
breaches a covenant on its debt obligation, and the loan becomes payable on demand. An
agreement is reached to provide a waiver of the breach on January 11, 20x2.
d. A long-term obligation of P4,000,000. The loan is maturing over eight (8) years, amounting to
P500,000 annually. The loan is dated September 1, 20x1, and the first maturity date is September
1, 20x2.
e. A debt obligation of P600,000 maturing on December 31, 20x4. The debt is callable on demand by
the lender at any time.
15. What amount of current liabilities should be reported on the December 31, 20x1, statement of financial
position?
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