2023 a line of credit with a commercial bank for up to 5 million any | Assignments Online
2023 a line of credit with a commercial bank for up to 5 million any | Assignments Online
Assignments Online 2023 Business Finance
a line of
credit with a commercial bank for up to $5 million any time during
2014. Any borrowings will mature two years from the date of
borrowing.
c. Noncallable 12% bonds with a face amount of $20 million were issued for
$20 million on September 30, 1988. The bonds mature on
September 30, 2014. Sufficient cash is expected to be available to
retire the bonds at maturity.
d. A $12 million 9% bank loan is payable on October 31, 2019. 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, 2013, due primarily to
an intentional temporary decline in inventory levels. Normal
inventory levels will be reestablished during the first quarter of 2014.
Required:
1. Determine the amount that can be excluded from classification as a
current liability (that is, reported as a noncurrent liability) for each.
Explain the reasoning behind your classifications.
2. Prepare the liability section of a classified balance sheet and any
necessary footnote disclosure for Nevada Harvester at December
31, 2013. Accounts payable and accruals are $22 million.
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