Question

JT Engineering has $960,000 of short-term debt. JT issues 10,000 shares of common stock prior to the issuance of the financial statements. JT’s net proceeds from the sale are $900,000. If JT uses all of the proceeds to liquidate its short-term debt after the balance sheet date, how much of the debt can be excluded from current liabilities?

Answer 1

Answer:

$900,000

Explanation:

since, JT engineering gets 900,000 from the issuance of shares. They can liquidate 900,000 of short term debts. Had they gotten 960,000 proceeds from the issuance of shares, they would have liquidate all the short term debts.