Hussein Hage has just approached a venture capitalist for financing for his new

Question

Hussein Hage has just approached a venture capitalist for financing for his new restaurant, Bistro Sally. The lender is willing to loan Bistro Sally Inc. $96,000 at a high-risk interest rate of 9%. The loan is payable over three years in fixed principal payments each quarter of $8,000, plus interest. Hussein signed a note payable and received the loan on April 30, 2018. He made the first payment on July 31. The company’s year end is October 31.

a) Show the statement of financial position presentation of the note payable at October 31, 2018

Explanation / Answer

Current portion = $8000 x 4 = $32000

Long-term portion = Note payable $96000 - Paid upto Oct. 31, 2018 $16000 - Current portion $32000 = $48000

Bistro Sally Statement of Financial Position (Partial) October 31, 2018 Current liabilities: Note Payable (current portion) 32000 Long-term liabilities: Note Payable 48000

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