Question1 the subsequent selected transactions relate to

Assignment Help Financial Accounting

Reference no: EM13348669

Question:

1. The subsequent selected transactions relate to liabilities of United Insulation Corporation. United's fiscal year ends on December 31.

Required:

Organize the appropriate journal entries through the maturity of each liability.

Jan. 13 Negotiated a revolving credit agreement with Parish Bank that will be renewed annually upon bank approval. The amount available under the line of credit is $20 million at the bank's prime rate.

Feb.1 Arranged a three-month bank loan of $5 million with Parish Bank under the line of credit agreement. Interest at the prime rate of 10% was payable at maturity.

May 1 Paid the 10% note at maturity.

Dec. 1 Supported by the credit line, issued $10 million of commercial paper on a nine-month note. Interest was discounted at issuance at a 9% discount rate.

31 Recorded any necessary adjusting entry(s).

2014

An annual report of Sprint Corporation contained a rather lengthy narrative entitled "Review of Segmental Results of Operation." The narrative noted that short-term notes payable and commercial paper outstanding at the finish of the year aggregated $756 million and that during the subsequent year "This entire balance will be replaced by the issuance of long-term debt or will continue to be refinanced under existing long-term credit facilities."

Required:

How did Sprint report the debt in its balance sheet? Why?

Reference no: EM13348669

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