Star, Inc. is a manufacturer and retailer of household furniture.  Your audit of the company's financial statements for the year ended December 31, 2018, discloses the following debt obligations of the company at the end of its reporting period.  Star's financial statements are authorized for issuance on March 6, 2019. A P150,000 short-term obligation due on March 1, 2019.  Its maturity could be extended to March 1, 2021 provided Star agrees to provide additional collateral.  On February 12, 2019, an agreement is reached to extend the loan's maturity to March 1, 2021. A short-term obligation of P3,600,000 in the form of notes payable due February 5, 2019.  The company issued 75,000 ordinary shares for P36 per share on January 25, 2019.  The proceeds from the issuance, plus P900,000 cash, were used to fully settle the debt on February 5, 2019. A long-term obligation of P2,500,000 due December 1, 2028.  On November 10, 2018, Star breaches a covenant on its debt obligation and the loan becomes payable on demand.  An agreement is reached to provide a waiver of the breach on December 11, 2018. A long-term obligation of P4,000,000.  The loan is maturing over 4 years in the amount of P1,000,000 per year.  The loan is dated September 1, 2018 and the first maturity date is September 1, 2019. A debt obligation of P1,000,000 maturing on December 31, 2021.  The debt is callable on demand by the lender at any time. What amount of current liabilities should be reported on the December 31, 2018, statement of financial position?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Star, Inc. is a manufacturer and retailer of household furniture.  Your audit of the company's financial statements for the year ended December 31, 2018, discloses the following debt obligations of the company at the end of its reporting period.  Star's financial statements are authorized for issuance on March 6, 2019.

  1. A P150,000 short-term obligation due on March 1, 2019.  Its maturity could be extended to March 1, 2021 provided Star agrees to provide additional collateral.  On February 12, 2019, an agreement is reached to extend the loan's maturity to March 1, 2021.
  2. A short-term obligation of P3,600,000 in the form of notes payable due February 5, 2019.  The company issued 75,000 ordinary shares for P36 per share on January 25, 2019.  The proceeds from the issuance, plus P900,000 cash, were used to fully settle the debt on February 5, 2019.
  3. A long-term obligation of P2,500,000 due December 1, 2028.  On November 10, 2018, Star breaches a covenant on its debt obligation and the loan becomes payable on demand.  An agreement is reached to provide a waiver of the breach on December 11, 2018.
  4. A long-term obligation of P4,000,000.  The loan is maturing over 4 years in the amount of P1,000,000 per year.  The loan is dated September 1, 2018 and the first maturity date is September 1, 2019.
  5. A debt obligation of P1,000,000 maturing on December 31, 2021.  The debt is callable on demand by the lender at any time.

What amount of current liabilities should be reported on the December 31, 2018, statement of financial position?

Expert Solution
steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Accounting for Notes
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education