Refinancing of short-term debt on december 31 2010


1. Refinancing of Short-Term Debt On December 31, 2010, Alexander Company had $1,200,000 of short-term debt in the form of notes payable due February 2, 2011. On January 21, 2011, the company issued 25,000 shares of its common stock for $36 per share, receiving $900,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2011, the proceeds from the stock sale, supplemented by an additional $300,000 cash, are used to liquidate the $1,200,000 debt. The December 31, 2010, balance sheet is issued on February 23, 2011. Show how the $1,200,000 of short-term debt should be presented on the December 31, 2010, balance sheet, including note disclosure.

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Accounting Basics: Refinancing of short-term debt on december 31 2010
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