Ask Question
3 October, 05:03

On December 31, 2016, SoBou Co. has $5,000,000 of short-term notes payable due on February 14, 2017. On January 10, 2017, SoBou arranged a line of credit with Suntrust Bank which allows SoBou to borrow up to $3,500,000 at one percent above the prime rate for three years. On February 3, 2017, SoBou borrowed $3,500,000 from Suntrust and used $500,000 additional cash to liquidate $4,000,000 of the short-term notes payable. The amount of the short-term notes payable that should be reported as a current liability on the December 31, 2016 balance sheet which is issued on March 2, 2017 is ... (a) $0. (b) $500,000. (c) $1,000,000. (d) $1,500,000.

+5
Answers (1)
  1. 3 October, 05:18
    0
    Answer:c. $1,000,000.00

    Explanation:

    The payment on the short term notes payable of $5million in 2017 in which total sum paid on the loan was $4 million will reduce the balance to $1million.

    The additional $3.5 million borrowed will not increase the short term notes payable because it's a long term credit being payable in three years.

    The additional five hundred thousand provided by the debtor will also add up to reduce the credit facility.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “On December 31, 2016, SoBou Co. has $5,000,000 of short-term notes payable due on February 14, 2017. On January 10, 2017, SoBou arranged a ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers