Question

On December 31, 2021, Apple Inc. had a $1,500,000 note payable outstanding, due July 31, 2022. Apple had borrowed the money to finance construction of a new plant and planned to refinance the note by issuing long-term bonds. Because Apple temporarily had excess cash, it prepaid $500,000 of the note on January 23, 2022. In February 2022, Apple completed a $3,000,000 bond offering. Apple will use the bond offering proceeds to repay the note payable at its maturity and to pay construction costs during 2022. On March 13, 2022, Apple issued its 2021 financial statements. What amount of the note payable should Apple include in the current liabilities section of its December 31, 2021, balance sheet

Answer 1

Answer:

$500,000

Explanation:

According to the Generally Accepted Accounting principles, the amount eliminated as current liabilities by refinancing cannot exceed the amount currently refinanced or prepaid in near by the future

Therefore in the given case, the excess cash prepaid balance of the note is $500,000 so the same is to be considered and included in the current liabilities section of the balance sheet