Question

On September 1, 2024, Southwest Airlines borrows $41 million, of which $10 million is due next year. Show how Southwest Airlines would report the $41 million debt on its December 31, 2024, balance sheet.

Answer 1

Southwest Airlines would list $10 million of its $41 million debt as a current liability and the remaining $31 million as long-term debt on its December 31, 2024 balance sheet.

Step-by-step explanation:

On September 1, 2024, Southwest Airlines borrows $41 million, with $10 million due the following year. On their December 31, 2024, balance sheet, this would be reported as a long-term debt and a current liability. The $10 million due next year would be classified under 'Current Liabilities' as the short-term portion of the debt since it is payable within one year. The remaining $31 million would be classified as 'Long-term Debt' since it is due beyond one year from the balance sheet date.