Exercise 13-4 KATE HOLMES COMPANY Partial Balance Sheet December 31, 2014 Exerci
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Question
Exercise 13-4
KATE HOLMES COMPANY
Partial Balance Sheet
December 31, 2014
Exercise 13-4
Your answer is partially correct. Try again. On December 31, 2014, Kate Holmes Company has $7,079,800 of short-term debt in the form of notes payable to Gotham State Bank due in 2015. On January 28, 2015, Holmes enters into a refinancing agreement with Gotham that will permit it to borrow up to 51% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $5,129,000 in May to a high of $8,047,000 in October during the year 2015. The interest cost of the maturing short-term debt is 15%, and the new agreement calls for a fluctuating interest rate at 1% above the prime rate on notes due in 2019. Holmes’s December 31, 2014, balance sheet is issued on February 15, 2015.Prepare a partial balance sheet for Holmes at December 31, 2014, showing how its $7,079,800 of short-term debt should be presented including footnote disclosure. (Enter account name only and do not provide descriptive information.)
KATE HOLMES COMPANY
Partial Balance Sheet
December 31, 2014
Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term DebtProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term DebtTotal Property, Plant and EquipmentTotal Stockholders' Equity:
$Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term DebtProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term DebtTotal Property, Plant and EquipmentTotal Stockholders' Equity:
Explanation / Answer
Footnote 1:
Under a financing agreement with Gotham State Bank the Company may borrow up to 51% of the gross amount of its accounts receivable at an interest cost of 1% above the prime rate. The Company intends to issue notes maturing in 2019 to replace $2,615,790 of short-term, 15%, notes due periodically in 2015. Because the amount that can be borrowed may range from $2,615,790 to $4,103,970 only $2,615,790 of the $7,079,800 currently maturing debt has been reclassified as long-term debt.
Kate Holmes Company Partial Balance Sheet 12/31/2014 Current Liabilities Notes Payable (Foot Note 1) $4,464,010 Long Term Debt Notes payable expected to be refinanced in 2015 (Foot Note 1) $2,615,790Related Questions
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