On December 31, 2020, McDaniel Company had $1,200,000 of short-term debt in the form of notes payable due February 2, 2021. On January 21, 2021, the company issued 25,000 shares of its common stock for $38 per share, receiving $950,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2021, the proceeds from the stock sale, supplemented by an additional $250,000 cash, are used to liquidate the $1,200,000 debt. The December 31, 2020, balance sheet is issued on February 23, 2021.

Show how the $1,200,000 of short-term debt should be presentedon the December 31, 2020, balance sheet.

Question

Business

Marshall Serrano

19 October, 08:02

On December 31, 2020, McDaniel Company had $1,200,000 of short-term debt in the form of notes payable due February 2, 2021. On January 21, 2021, the company issued 25,000 shares of its common stock for $38 per share, receiving $950,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2021, the proceeds from the stock sale, supplemented by an additional $250,000 cash, are used to liquidate the $1,200,000 debt. The December 31, 2020, balance sheet is issued on February 23, 2021.

Show how the $1,200,000 of short-term debt should be presentedon the December 31, 2020, balance sheet.

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Answers (1)

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Eve Terrell · Answer 1

current liabilities

note payable 1,200,000

...

non-current liabilities

...

Explanation:

As the note payable will be due within a year it qualifies as current liabilities

Non-current liabilities are those which their obligation arise for period longer than a year

Also, the balance sheet claims that first, must go the current liabilities and after that, the non-current or "long-term"