How much note payable should be consider a current liability


At December 31, 2010, Burr Corporation owes $500,000 on a note payable due February 15, 2011. It issues its audited financials on April 1of each year. How much of the note payable should be considered a current liability under the following circumstances:

• Butt pays off the note on February 15, 2011 as planned, using company cash.

• Burr pays off the note on February 15, 2011 as planned, issuing company stock in exchange for the debt.

• Burr refinances the debt on February 15, 2011 and uses the proceeds from the new long-term debt to pay off the note.

• Burr tells the auditors that it plans to refinance the debt by February 15, 2011 and even though it has not contacted the bank yet to discuss the refinancing, it has generally been able to secure favorable financing

 

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Accounting Basics: How much note payable should be consider a current liability
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