Question

On December 31, 2020, Kingbird Company had $1,216,000 of short-term debt in the form of notes payable due February 2, 2021. On January 21, 2021, the company issued 25,500 shares of its common stock for $42 per share, receiving $1,071,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2021, the proceeds from the stock sale, supplemented by an additional $145,000 cash, are used to liquidate the $1,216,000 debt. The December 31, 2020, balance sheet is issued on February 23, 2021. Show how the $1,216,000 of short-term debt should be presented on the December 31, 2020, balance sheet. (Enter account name only and do not provide descriptive information.)

Answer 1

Answer and Explanation:

The presentation of short term debt is presented below:

Kingbird Company

Partial Balance sheet

December 31, 2020

Particulars Amount ($)

Current Liabilities :

Notes Payable $145,000

Long term Debt :

Notes Payable 1,216,000

Notes Payable is come from is

= $1,216,000 - $1,071,000

= $145,000

The company's total notes payable is $1,216,000, out of which $1,071,000 are shown as a issue of common stock and $145,000 are liquidate using cash.