1nbsp at december 31 2014 cordova leathers liabilities

Question

1.  At December 31, 2014, Cordova Leather's liabilities include the following:

A. $18 million of 10% notes, due on March 31, 2016. A debt covenant requires Cordova to maintain current assets at least equal to 150% of its current liabilities. On December 31, 2014, Cordova is in violation of this covenant, and the terms of covenant allow the lender to demand immediate repayment of the entire outstanding loan balance.

B. $3 million of 8% notes due June 30, 2015.  On January 31, 2015, the Thrifty National Bank signs an agreement with Cordova to refinance $1 million of the 8% notes where the new maturity date is June 30, 2019. On February 15, 2015, Cordova works with the Not-So-Thrifty National Bank and refinances $1.5 million of the 8% notes where the new maturity date is June 30, 2018.

Required:  Ignoring accrued interest, and assuming that Cordova issues the 2014 financial statements on March 31, 2015, what amount should Cordova report in the current liabilities section of the balance sheet?

2. Crooked National Bank lends $1,000,000 to Agentz, Inc. on December 31, 2013.  The loan term is 15 years, with 12% annual interest and monthly payments of $12,001.68 beginning January 31, 2014.  A partial amortization schedule for the loan appears below:

Monthly
Payment    Payment (P&I)    Principal    Interest    
Balance
                $1,000,000.00
1    $12,001.68    $2,001.68    $10,000.00    $997,998.32
2    $12,001.68    $2,021.70    $9,979.98    $995,976.62
3    $12,001.68    $2,041.91    $9,959.77    $993,934.71
4    $12,001.68    $2,062.33    $9,939.35    $991,872.38
5    $12,001.68    $2,082.96    $9,918.72    $989,789.42
6    $12,001.68    $2,103.79    $9,897.89    $987,685.63
7    $12,001.68    $2,124.82    $9,876.86    $985,560.81
8    $12,001.68    $2,146.07    $9,855.61    $983,414.74
9    $12,001.68    $2,167.53    $9,834.15    $981,247.21
10    $12,001.68    $2,189.21    $9,812.47    $979,058.00
11    $12,001.68    $2,211.10    $9,790.58    $976,846.90
12    $12,001.68    $2,233.21    $9,768.47    $974,613.69
13    $12,001.68    $2,255.54    $9,746.14    $972,358.14
14    $12,001.68    $2,278.10    $9,723.58    $970,080.05
15    $12,001.68    $2,300.88    $9,700.80    $967,779.17
16    $12,001.68    $2,323.89    $9,677.79    $965,455.28

Assume that the operating cycle for Agentz is less than one year.

Required: Ignoring accrued interest, what amounts should Agentz report as current and non-current liabilities on the December 31, 2013 balance sheet?

Answer 1

Act on this assignment which describing to current liabilities. 1. At December 31, 2014, Cordova Leather's liabilities include the subsequent: A. $18 million of 10% notes, due on March 31, 2016. A debt covenant needs Cordova to preserve current assets at least equal to 150% of its current liabilities. On December 31, 2014, Cordova is in violation of this covenant, and the terms of covenant permit the lender to demand instant repayment of the entire outstanding loan balance. B. $3 million of 8% notes due June 30, 2015. On January 31, 2015, the Thrifty National Bank symbols a contract through Cordova to refinance $1 million of the 8% notes where the new development date is June 30, 2019. On February 15, 2015, Cordova efforts through the Not-So-Thrifty National Bank and refinances $1.5 million of the 8% notes where the original maturity date is June 30, 2018.