On December 31, 2020, Grand Company had $1,232,000 of short-term debt in the form of notes payable due February 2, 2021. On January 21, 2021, the company issued 25,500 shares of its common stock for $48 per share, receiving $1,224,000 proceeds after brokerage fees and other costs of issuance. On February 2, 2021, the proceeds from the stock sale, supplemented by an additional $8,000 cash, are used to liquidate the $1,232,000 debt. The December 31, 2020, balance sheet is issued on February 23, 2021. Show how the $1,232,000 of short-term debt should be presented on the December 31, 2020, balance sheet. (Enter account name only and do not provide descriptive information.)
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Ans.
Calculation of notes payable is as follows:
Notes Payable=$1,232,000−$1,224,000 = $ 8,000
The company's total notes payable is $1,232,000, out of which $1,224,000 are issue of common stock and $ 8,000 are liquidate using cash.
Grand Company | |
Partial Balance sheet | |
December 31, 2020 | |
Particulars | Amount ($) |
Current Liabilities : | |
Notes Payable | 8,000 |
Long term Debt : | |
Notes Payable | 1,224,000 |
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