Chapter 9, Problem 5AP

1.

To determine

State the way in which the decisions of Person J affect the current liabilities versus long term liabilities reported as on December 31, 2021.

2.

To determine

Calculate the current ratio and the debt to equity ratio at the end of 2021 (a) with Person J’s assumption and (b) without Person J’s assumption.

3.

To determine

Identify the impact of Person J‘s decision regards to the lenders.

4.

To determine

State whether Person J should record the full balance of the note as a long-term liability in its balance sheet as of December 31, 2021.