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JulsSmile [24]
3 years ago
5

Exercise 13-09 On December 31, 2020, Sage Company has $7,044,000 of short-term debt in the form of notes payable to Gotham State

Bank due in 2021. On December 28, 2020, Sage enters into a refinancing agreement with Gotham that will permit it to borrow up to 64% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $6,043,000 in May to a high of $8,034,000 in October during the year 2021. The interest cost of the maturing short-term debt is 15%, and the new agreement calls for a fluctuating interest at 1% above the prime rate on notes due in 2025. Sage’s December 31, 2020, balance sheet is issued on February 15, 2021. Prepare a partial balance sheet for Sage at December 31, 2020, showing how its $7,044,000 of short-term debt should be presented. (Enter account name only and do not provide descriptive information.)
Business
1 answer:
sasho [114]3 years ago
6 0

Answer:

Explanation:

The preparation of the partial balance sheet for Sage at December 31, 2020 is presented below

                                                 NASH COMPANY

                                              Partial Balance Sheet

                                            At December 31, 2020

Current liabilities

Notes payable                                                    $3,176,480

Long term debt

Note payable refinanced in the year 2021        $3,867,520

The computation is shown below:

For note payable i.e shown in the current liabilities is

= $7,044,000 - $6,043,000 × 64%

= $3,176,480

And, the refinanced note payable is

= $6,043,000 × 64%

=  $3,867,520

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