Coover Corporation’s financial statements for the year ending December 31, 2014.
ID: 2399259 • Letter: C
Question
Coover Corporation’s financial statements for the year ending December 31, 2014.
At December 31, 2014 Coover had a $100,000 outstanding note payable that was issued in 2011 and is due March 5, 2015. On January 10, 2015, Coover sold 1,000 shares of its $30 par value common stock for $90,000. Coover intends to use the $90,000 proceeds plus $10,000 cash on hand to repay the note payable on March 5, 2015.
Can Coover report the $100,000 note payable as a current liability at December 31, 2014 because it will be paid off in the short-run? Or it is considered non-current liability?
How should it be reported?
Explanation / Answer
current liability is a liability that is due within a year from the end of reporting perio .In the current situation ,since note payable will be paid within a year(march 5 2015) from the end of reporting period (31 decemebr 2014) ,it will be classified as current liability in balance sheet .
It will be reported as current liability in balance sheet .
Balance sheet (Partial)
As on december 31 , 2014
Balance sheet (Partial)
As on december 31 , 2014
Liabilities and stockholders equity Current liability Note payable (sue march 5 2015) 100000