Question

Busi 2222 Handout Assignment ch 10 Due: January 22, 2019 Question 2 Mel's Building Centre has three obligations outstanding on December 31, 2021, as follows: 1. Six-year, $ 75,000,5%, note payable issued on December 31, 2019. Mel's Building Centre is required to pay $ 12,500 plus interest on December 31 each year starting in 2020. 2. Five-year, $ 90,000, 4.5%, note payable issued on November 30, 2020. Mel's Building Centre is I required to pay $1,500 plus interest at the end of each month starting on December 31, 2020. 3. Twenty-year, $ 600,000, 3.75%, mortgage payable issued on April 1, 2004. Mel's Building Centre is required to pay $ 2,500 plus interest at the end of each month starting on May 1, 2004. Instructions Calculate the amount of each note to be included in current and non-current liabilities on Mel's Building Centre December 31, 2021, balance sheet. Ignore interest.

Answer 1

Solution

1) Note payable mature December 31, 2025 , therefore the debt will be outstanding during entire 2021.

Obligation balance at December 31, 2021 = $ 50,000 (75,000 - (12,500 x 2yrs))

Current Portion = $ 12,500, Non current portion = $ 37,500 ($ 50,000 - $ 12,500)

2) Note payable matures November 30, 2025 , therefore the debt will be outstanding during entire 2021

Obligation balance at December 31, 2021 = $ 70,500 (90,000 - (1,500 x 13 months)

Current Portion = $ 18,000 (1,500 x 12 months), Non current portion = $ 52,500 (70,500-18,000)

3) Mortgage payable matures April 1 , 2024, therefore the debt will be outstanding during entire 2021

Obligation balance at December 31, 2021 = $ 70,000 ($6,00,000- (2,500x 212 months))

Current Portion = $ 30,000 (2,500 x 12 months) , Non current portion = $ 40,000 (70,000-30,000)

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