Prepare a partial balance sheet for the company at

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Reference no: EM13482238

On December 31, 2997 the company has $7M of short term debt inthe form of notes payable to the bank due in 2008. On January 28,2008, the company enters into a refinancing agreement with the bankthat will permit it to borrow up to 60% of the gross amount of itsaccounts receivable. Receivables are expected to range between alow of $5M in May to a high of $8M in October during the year 2008.The interest cost of the maturing short term debt is 15% and thenew agreement calls for a fluctuating interest at 1% above theprime rate on notes due in 2012. The Balance sheet is issued on February 15, 2008.

Instructions:

Prepare a partial balance sheet for the company at December31, 2007 showing how its $7M of short term debt should be presented, including a footnote disclosure.

Reference no: EM13482238

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