Question

Sheridan Company has $3080000 of short-term debt it expects to retire with proceeds from the sale of 87000 shares of common stock. If the stock is sold for $25 per share subsequent to the balance sheet date, but before the balance sheet is issued, what amount of short-term debt could be excluded from current liabilities?

Answer 1

Answer: $2,175,000

Step-by-step explanation:

Given that,

short-term debt it expects = $3,080,000

sale of common stock = 87000 shares

stock sold = $25 per share

Short-term debt could be excluded from current liabilities = 87,000 shares × $25 per share

= $2,175,000

Therefore, the amount $2,175,000 of short term debt have to be excluded from current liabilities.