At the financial statement date of December 31, 2017, the liabilities outstandin
ID: 2537922 • Letter: A
Question
At the financial statement date of December 31, 2017, the liabilities outstanding of Pollard Corporation included the following 1. Cash dividends on common stock, $36,300, payable on January 15, 2018. 2. Note payable to wabaso State Bank, $490,000, due January 20, 2018. 3. Serial bonds, $1,328,000, of which $332,000 mature during 2018. 4. Note payable to Orlando National Bank, $349,000, 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 Wabaso State Bank was paid. January 25: The corporation entered into a financing agreement with Wabaso State 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. ng January 26: 40,000 shares of common stock were issued for $404,800$349,000 of the proceeds was used to liquidate the note payable to Orlando National Bank. February 1: The fnancial statements for 2017 were issued. Prepare a partial balance sheet for Pollard 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 Pollard Corporation Partial Balance Sheet at December 31, 2017Explanation / Answer
Answer
It is mentioned in the question that Amount paid to Orlando National Bank on January 27,2018 is financed by issuing Common Shares so to redeem a liability we are raising money from Equity.
So we will term this liability i.e. Note payable to Orlando National Bank as Long term liability not Current Liability
Partial Balance Sheet at December 31, 2017
Current Liabilities
Dividends Payable
36,300
Notes Payable - Wabaso State Bank
490,000
Serial Bonds (Maturity in 2018)
332,000
Total Current Liabilities
858,300
Long Term Liabilities
Notes Payable - Orlando National Bank
349,000
Serial Bonds (1,328 ,000 - 332,000)
996,000
Total Long term Liabilities
1,345,000
Total Liabilities
2,203,300
Note
Your list has some things missing, No account is matching the Serial Bond account.
Partial Balance Sheet at December 31, 2017
Current Liabilities
Dividends Payable
36,300
Notes Payable - Wabaso State Bank
490,000
Serial Bonds (Maturity in 2018)
332,000
Total Current Liabilities
858,300
Long Term Liabilities
Notes Payable - Orlando National Bank
349,000
Serial Bonds (1,328 ,000 - 332,000)
996,000
Total Long term Liabilities
1,345,000
Total Liabilities
2,203,300
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