Problem 13-3 (Algo) Current-noncurrent classification of debt; financial statement effects [LO13-1, 13-4] The balance sheet at December 31, 2024, for Nevada Harvester Corporation includes the liabilities listed below: a. 8% bonds with a face amount of $50 million were issued for $50 million on October 31, 2015. The bonds mature on October 31, 2035. Bondholders have the option of calling (demanding payment on) the bonds on October 31, 2025, at a redemption price of $50 million. Market conditions are such that the call is not expected to be exercised. b. Management intended to refinance $8.4 million of its 9% notes that mature in May 2025. In early March, prior to the actual issuance of the 2024 financial statements, Nevada Harvester negotiated a line of credit with a commercial bank for up to $4.2 million any time during 2025. Any borrowings will mature two years from the date of borrowing. c. Noncallable 7% bonds with a face amount of $23.0 million were issued for $23.0 million on September 30, 2005. The bonds mature on September 30, 2025. Sufficient cash is expected to be available to retire the bonds at maturity. d. A $17 million 9% bank loan is payable on October 31, 2030. The bank has the right to demand payment after any fiscal year-end in which Nevada Harvester's ratio of current assets to current liabilities falls below a contractual minimum of 1.7 to 1 and remains so for six months. That ratio was 1.45 on December 31, 2024, due primarily to an intentional temporary decline in inventory levels. Normal inventory levels will be reestablished during the first quarter of 2025. Required: 1. For each liability listed above, what amount will be reported as a current liability and as a noncurrent liability on the December 31, 2024 balance sheet? 2. Prepare the liability section of a classified balance sheet for Nevada Harvester at December 31, 2024. Accounts payable and accruals are $27 million. Complete this question by entering your answers in the tabs below. Required Required 1 2 Prepare the liability section of a classified balance sheet for Nevada Harvester at December 31, 2024. Accounts payable and accruals are $27 million. Note: Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Current Liabilities NEVADA HARVESTER CORPORATION Balance Sheet (partial) Accounts payable and accruals 9% notes payable, due May 2025 Current portion of long-term debt: At December 31, 2024 ($ in millions) 7% bonds payable, due September 30, 2025 8% bonds payable, due October 31, 2035, redeemable on $ 27.0 October 31, 2025 Total Current Liabilities Long-Term Debt Currently maturing debt classified as long-term: 9% loan payable, due October 2030 Total Long-term Liabilities Total Liabilities 0.0 27.0 0.0 $ 27.0 < Required 1 Required 2 >

Problem 13-3 (Algo) Current-noncurrent classification of debt; financial statement effects [LO13-1, 13-4] The balance sheet at December 31, 2024, for Nevada Harvester Corporation includes the liabilities listed below: a. 8% bonds with a face amount of $50 million were issued for $50 million on October 31, 2015. The bonds mature on October 31, 2035. Bondholders have the option of calling (demanding payment on) the bonds on October 31, 2025, at a redemption price of $50 million. Market conditions are such that the call is not expected to be exercised. b. Management intended to refinance $8.4 million of its 9% notes that mature in May 2025. In early March, prior to the actual issuance of the 2024 financial statements, Nevada Harvester negotiated a line of credit with a commercial bank for up to $4.2 million any time during 2025. Any borrowings will mature two years from the date of borrowing. c. Noncallable 7% bonds with a face amount of $23.0 million were issued for $23.0 million on September 30, 2005. The bonds mature on September 30, 2025. Sufficient cash is expected to be available to retire the bonds at maturity. d. A $17 million 9% bank loan is payable on October 31, 2030. The bank has the right to demand payment after any fiscal year-end in which Nevada Harvester's ratio of current assets to current liabilities falls below a contractual minimum of 1.7 to 1 and remains so for six months. That ratio was 1.45 on December 31, 2024, due primarily to an intentional temporary decline in inventory levels. Normal inventory levels will be reestablished during the first quarter of 2025. Required: 1. For each liability listed above, what amount will be reported as a current liability and as a noncurrent liability on the December 31, 2024 balance sheet? 2. Prepare the liability section of a classified balance sheet for Nevada Harvester at December 31, 2024. Accounts payable and accruals are $27 million. Complete this question by entering your answers in the tabs below. Required Required 1 2 Prepare the liability section of a classified balance sheet for Nevada Harvester at December 31, 2024. Accounts payable and accruals are $27 million. Note: Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5). Current Liabilities NEVADA HARVESTER CORPORATION Balance Sheet (partial) Accounts payable and accruals 9% notes payable, due May 2025 Current portion of long-term debt: At December 31, 2024 ($ in millions) 7% bonds payable, due September 30, 2025 8% bonds payable, due October 31, 2035, redeemable on $ 27.0 October 31, 2025 Total Current Liabilities Long-Term Debt Currently maturing debt classified as long-term: 9% loan payable, due October 2030 Total Long-term Liabilities Total Liabilities 0.0 27.0 0.0 $ 27.0 < Required 1 Required 2 >

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 7P: Wilbury Corporation issued 1 million of 13.5% bonds for 985,071.68. The bonds are dated and issued...

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