On December 31, 2006, Frye Co. has $2,000,000 of short-term notes payable due on February 14, 2007. On February 2, 2007, Frye issued a three-year notes to borrow $1,500,000 from County Bank and used $200,000 additional cash to liquidate $1,700,000 of the short-term notes payable.

The amount of the short-term notes payable that should be reported as current liabilities on the December 31, 2006 balance sheet which is issued on March 5, 2007, is $___.

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Business

Alonso Castaneda

18 April, 22:06

On December 31, 2006, Frye Co. has $2,000,000 of short-term notes payable due on February 14, 2007. On February 2, 2007, Frye issued a three-year notes to borrow $1,500,000 from County Bank and used $200,000 additional cash to liquidate $1,700,000 of the short-term notes payable.

The amount of the short-term notes payable that should be reported as current liabilities on the December 31, 2006 balance sheet which is issued on March 5, 2007, is $___.

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Answers (1)

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Raul Morgan · Answer 1

The amount of short term notes payable reported as Current liabilities (CL) on December 31, 2006 is $500,000

Explanation:

The amount of short term notes payable reported as Current liabilities (CL) on December 31, 2006 is computed as:

Amount of short term notes payable = Short term notes payable due on Feb 14 - Borrowed from County Bank

where

Short term notes payable due on Feb 14 is $2,000,000

Borrowed from County Bank is $1,500,000

Putting the values above:

Amount of short term notes payable = $2,000,000 - $1,500,000

Amount of short term notes payable = $500,000