Question

Irkalla Co. has the following liabilities at December 31, year 8: Trade accounts payable $ 200,000 Short-term borrowings $ 100,000 Bank loan, payable annually over 20 years, with a current portion of $100,000 $ 2,000,000 Other bank loan, matures June 30, year 9 $ 1,000,000 The bank loan of $2,000,000 requires Irkalla to maintain certain financial ratios but Irkalla has not been able to do so and is in violation of the loan agreement. The creditor has not waived its rights in regard to the loan. What amount should Irkalla report as current liabilities at December 31, year 8

Answer 1

$3,300,000

Step-by-step explanation:

Calculation for the amount that Irkalla should report as current liabilities at December 31, year 8

CURRENT LIABILITIES will include the addition of the following:

Trade accounts payable of $200,000

Short-term borrowings of $100,000

Current portion of the long-term loan $100,000

Short-term loan of $1,000,000

TOTAL $1,400,000

ADD Bank loan $2,000,000

CURRENT LIABILITIES $3,300,000

Therefore the amount that Irkalla should report as current liabilities at December 31, year 8 will be $3,300,000