Question 1 At the financial statement date of December 31, 2017, the liabilities

ID: 2537974 • Letter: Q

Question

Question 1 At the financial statement date of December 31, 2017, the liabilities outstanding of Pollard Corporation indluded the following 1. Cash dividends on common stock, $44,100, payable on January 15, 2018. 2. Note payable to Wabaso State Bank, $459,000, due January 20, 2018. 3. Serial bonds, $1,476,000, of which $369,000 mature during 2018 4. Note payable to Orlando National Bank, $284,000, due January 27, 2018. 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 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 anuary 26: 40,000 shares of common stock were issued for $336,200. $284,000 of the p proceeds was used to liquidate the note payable to Orlando National Bank February 1: The financial statements for 2017 were issued. Prepare a partial balance sheet for Pollard Corporation, showing the manner in which the properly classified between current and long-term, and appropriate note disdosure should be included above liabilities should be presented at December 31, 2017. The liabilities should be Pollard Corporation Partial Balance Sheet at December 31, 2017

Explanation / 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

Dividend Payable

44,100

Notes Payable - Wabaso State Bank

459,000

Serial Bonds (Maturity in 2018)

369,000

Total Current Liabilities

872,100

Long Term Liabilities

Notes Payable - Orlando National Bank

284,000

Serial Bonds (1,476,000 - 369,000)

1,107,000

Total Long term Liabilities

1,391,000

Total Liabilities

2,263,100