PLEASE SHOW WORK AND EXPLAIN At December 31 2012 Bennett Cor

PLEASE SHOW WORK AND EXPLAIN.

At December 31, 2012, Bennett Corp. owed notes payble of $1,000,000 with a maturity date of april 30 2013. These notes did not arise from transactions in the normal course of business. ON February 1, 2013, Bennett issued $3,000,000 of ten-year bonds with the intention of using part of the bond proceeds to liquidate the $1,000,000 of notes payable Bennett\'s December 31, 2012, financial statements were issued March 29, 2013. How much of the $1,000,000 notes payable should be classified as current in Bennett\'s balance sheet at December 31, 2012?

Solution

None of the value of noted payable would be recorded as current liabilities in balance sheet at december 31 2012 because these notes payable are long term in nature and it would be liquidated by the proceeds of ten years bonds. Amount of notes payable would not be shown as current liabilities in balance sheet and will be shown as long term liabilities.

value of notes payabel in current liabilities is zero