Research Case 13-1 (Static) Bank loan; accrued interest [LO13-1, 13-2]A fellow accountant has solicited your opinion regarding the classification of short-term obligations repaid prior to being replaced by along-term security. Cheshire Foods, Inc., issued $5,000,000 of short-term commercial paper during 2020 to finance construction of aplant. At September 30, 2021, Cheshire's fiscal year-end, the company intends to refinance the commercial paper by issuing long-termbonds. However, because Cheshire temporarily has excess cash, in November 2021 it liquidates $2,000,000 of the commercial paperas the paper matures. In December 2021, the company completes a $10,000,000 long-term bond issue. Later during December, itissues its September 30, 2021, financial statements. The proceeds of the long-term bond issue are to be used to replenish $2,000,000In working capital, to pay $3,000,000 of commercial paper as it matures in January 2022, and to pay $5,000,000 of construction costsexpected to be incurred later that year to complete the plant.You initially are hesitant because you don't recall encountering a situation in which short-term obligations were repaid prior to beingreplaced by a long-term security. However, you are encouraged by a vague memory that this general topic is covered by GAAPliterature you came across when reading an Internet article.Required:Determine how the $5,000,000 of commercial paper should be classified by citing the specific nine-digit Codification citation (XXX-XX-XX-XX) in the FASB Codification. Before doing so, formulate your own opinion on the proper treatment.TopicSubtopicSectionParagraph

Current liabilities are the obligations of a business that must be paid back from current assets or…

Required: Determine how the $5,000,000 of commercial paper should be classified by citing the specific nine-digit Codification citation (XXX-XX- XX-XX) in the FASB Codification. Before doing so, formulate your own opinion on the proper treatment.

Required: Determine how the $5,000,000 of commercial paper should be classified by citing the specific nine-digit Codification citation (XXX-XX- XX-XX) in the FASB Codification. Before doing so, formulate your own opinion on the proper treatment.

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

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 15P: Comprehensive Receivables Problem Blackmon Corporations December 31, 2018, balance sheet disclosed...

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Comprehensive Receivables Problem Blackmon Corporations December 31, 2018, balance sheet disclosed the following information relating to its receivables: The company has a recourse liability of 700 related to a note receivable sold to a bank. During 2019, credit sales (terms, n/EOM) totaled 2,200,000, and collections on accounts receivable (unassigned) amounted to 1,900,000. Uncollectible accounts totaling 18,000 from several customers were written off, and a 1,350 accounts receivable previously written off was collected. Additionally, the following transactions relating to Blackmons receivables occurred during the year: On December 31, 2019, an aging of the accounts receivable balance indicated the following: Required: 1. Prepare the journal entries to record the preceding receivable transactions during 2019 and the necessary adjusting entry on December 31, 2019. Assume a 360-day year for interest calculations and round calculations to the nearest dollar. 2. Prepare the receivables portion of Blackmons December 31, 2019, balance sheet. 3. Next Level Compute Blackmons accounts receivable turnover in days, assuming a 360-day business year. What is your evaluation of its collection policies? 4. If Blackmon uses IFRS, what might be the heading of the section for the receivables reported in Requirement 2?
Cozy Bank loaned a borrower P7,500,000 on January 1, 2018. Problem 7-6 (IAA) The terms of the loan were payment in full on 2023, plus annual interest payment at 12%. January 1, The interest payment was made as scheduled on 2019. However, due to financial setbacks, the borrower w unable to make the 2020 interest payment. January 1, The bank considered the loan impaired and projected the cash flows from the loan on December 31, 2020. The bank accrued the interest on December 31, 2019, but dia not continue to accrue interest for 2020 due to th impairment of the loan. Projected cash flows Amount projected on December 31, 2020 Date of cash flow December 31, 2021 December 31, 2022 December 31, 2023 December 31, 2024 500,000 1,000,000 2,000,000 4,000,000 Present value of 1 at 12% For one period For two periods For three periods For four periods 0.89 0.80 0.71 0.64 Required: 1. Compute the present value of the loan receivable on December 31, 2020. 2. Compute the impairment loss on the loan…
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1. The following selected transactions relate to liabilities of Fairfox Inc., for portions of 2021. Fairfox's fiscal year ends on December 31. 2021 a) April 1 Arranged a short-term line of credit with Belize Bank amounting to $20,000,000 at the bank's prime rate of 12%. The company will pay no commitment fees for this arrangement. b) July5 Received a $75,000 refundable deposit from a major customer for mailing containers used to transport the company's equipment. c) Oct. 17 Received most of the mailing containers covered by the refundable deposit and a letter stating that the customer will retain containers represented by $12,000 of the deposit and therefore does not request a refund for that amount. The cost of the forfeited containers was $4,500. d) Aug. 1 Borrowed $7 million cash from Belize Bank under the line of credit arranged in March and issued a ten-month promissory note. Interest at the prime rate of 12% was payable at maturity. e) Dec. 31 Recorded appropriate adjusting…
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Dakota Company received a $25,000, one year, 9 percent bank loan on October 31, 2018. Interest is payable at the end of the loan term. Dakota's adjustment at the end of their fiscal year on March 31, 2019 is to increase Interest Payable and Interest Expense for: Select one: a. $375 b. $937.50 c. $1,125 d. $2,250
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