At the financial statement date of December 31, 2017, the liabilities outstandin
ID: 2527291 • Letter: A
Question
At the financial statement date of December 31, 2017, the liabilities outstanding of Arcadia Corporation included the following:
- Cash dividends on common stock, $50,000, payable on January 15, 2018.
- Note payable to Silicon Valley Bank, $470,000, due January 20, 2018.
- Serial bonds, $1,800,000, of which $450,000 mature during 2018.
- Note payable to Orlando National Bank, $300,000, due January 27, 2018.
The following transactions occurred early in 2018:
January 15: The cash dividends on common stock were paid.
January 20: The note payable to Silicon Valley Bank was paid.
January 25: The corporation entered into a financing agreement with Silicon Valley Bank, enabling it to borrow up to $500,000 at any time through the end of 2020. Amounts borrowed under the agreement would bear interest at 1% above the bank's prime rate and would mature 3 years from the date of the loan. The corporation immediately borrowed $400,000 to replace the cash used in paying its January 20 note to the bank.
January 26: 40,000 shares of common stock were issued for $350,000. $300,000 of the proceeds was used to liquidate the note payable to Orlando National Bank.
February 1: The financial statements for 2017 were issued.
Instructions
Prepare a partial balance sheet for Arcadia Corporation, showing the manner in which the above liabilities should be presented at December 31, 2017. The liabilities should be properly classified between current and long-term, and appropriate note disclosure should be included.
Explanation / Answer
Arcadia corporation
Partial Balance Sheet
As on. 31st December,2017
Notes
1 Notes payable to silicon valley bank 470000
Notes payable to Orlando national bank 300000
Total. 770000
2. Total serial bonds 1800000
Due after 2018 1350000
current liability 450000
3.Serial bonds 1800000
Due in the year 2018. 450000
Non current or long term borrowing 1350000
Note : Transaction taking place after 31 st December 2017 should not be incorporated in balance sheet as it's is prepared as on date.
Particulars Note No. Amount Current liabilities Dividend payable 50000 Notes payable 1 770000 Short term borrowing(serial bonds due) 2 450000 Non current liabilities Long term borrowing 3 1350000 Total 2620000Related Questions
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