Question

On December 31, 2020, Tamarisk Company had $1,260,000 of short-term debt in the form of notes payable due February 2, 2021. On January 21, 2021, the company issued 24,600 shares of its common stock for $39 per share, receiving $959,400 proceeds after brokerage fees and other costs of issuance. On February 2, 2021, the proceeds from the stock sale, supplemented by an additional $300,600 cash, are used to liquidate the $1,260,000 debt. The December 31, 2020, balance sheet is issued on February 23, 2021. Show how the $1,260,000 of short-term debt should be presented on the December 31, 2020, balance sheet. (Enter account name only and do not provide descriptive information.) Tamarisk Company Partial Balance Sheet

Answer 1

Answer:

The amount of Notes Payable is $300,600

Explanation:

The Balance Sheet (Partial) shown below:

Company T

Balance Sheet (Partial)

At the Year ended on December 31, 2020

Liabilities                                          Amount

Current Liabilities

Notes Payable                                 $300,600

Long term Liabilities

Notes Payable (Refinanced)           $959,400

Working Note:

The amount of notes payable (current liabilities) is computed as:

Notes Payable (Current Liabilities) = Short Term notes payable before refinancing - Proceeds from issue of Common Stock

= $1,260,000 - $959,400

= $300,600