Question

Coover Corporation’s financial statements for the year ending December 31, 2014. At December 31, 2014 Coover...

Coover Corporation’s financial statements for the year ending December 31, 2014.

At December 31, 2014 Coover had a $100,000 outstanding note payable that was issued in 2011 and is due March 5, 2015. On January 10, 2015, Coover sold 1,000 shares of its $30 par value common stock for $90,000. Coover intends to use the $90,000 proceeds plus $10,000 cash on hand to repay the note payable on March 5, 2015.

Can Coover report the $100,000 note payable as a current liability at December 31, 2014 because it will be paid off in the short-run? Or it is considered non-current liability?

How should it be reported?

Business   Accounting   
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Answer #1

current liability is a liability that is due within a year from the end of reporting perio .In the current situation ,since note payable will be paid within a year(march 5 2015) from the end of reporting period (31 decemebr 2014) ,it will be classified as current liability in balance sheet .

It will be reported as current liability in balance sheet .

Balance sheet (Partial)

As on december 31 , 2014
Liabilities and stockholders equity
Current liability
Note payable (sue march 5 2015) 100000
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