Question

On December 31, 2020, Marigold 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.)

Answer 1

ANSWER

Marigold Company Partial Balance Sheet December 31, 2020
Current Liabilities:
Notes Payable (Note 1)	$ 8,000
Long Term Debt:
Notes Payable refinanced in February 2021	$1,224,000

Note: Short-term debt refinanced. As of December 31, 2020, the company had notes payable totalling $1,232,000 due on February 2, 2021. These notes were refinanced on their due date to the extent of $1,224,000 received from the issuance of common stock on January 21, 2021. The balance of $8,000 was liquidated using current assets.

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