Exercise 13-8 On December 31, 2017, Blue Company had $1,232,000 of short-term de

ID: 2528251 • Letter: E

Question

Exercise 13-8 On December 31, 2017, Blue Company had $1,232,000 of short-term debt in the form of notes payable due February 2, 2018. On January 21, 2018, the company issued 25,500 shares of its common stock for $48 per share, receiving $1,224,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2018, the proceeds from the stock sale, supplemented by an additional $8,000 cash, are used to liquidate the $1,232,000 debt. The December 31, 2017, balance sheet is issued on February 23, 2018. Show how the $1,232,000 of short-term debt should be presented on the December 31, 2017, balance sheet. (Enter account name only and do not provide descriptive information.) Blue Company Partial Balance Sheet December 31, 2017

Explanation / Answer

Solution:

Blue Company

Partial Balance Sheet

December 31, 2017

Current Liabilities:

Notes Payable (Note 1)

$ 8,000

Long Term Debt:

Notes Payable refinanced in February 2018

$1,224,000

Note: Short-term debt refinanced. As of December 31, 2017, the company had notes payable totalling $1,232,000 due on February 2, 2018. These notes were refinanced on their due date to the extent of $1,224,000 received from the issuance of common stock on January 21, 2018. The balance of $8,000 was liquidated using current assets.