ACCOUTING PRIN SET LL INCLUSIVE
14th Edition
ISBN: 9781119815327
Author: Weygandt
Publisher: WILEY
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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
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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…
LuxAll Inc., includes the following selected accounts in its general ledger at December 31,
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