Answer to Question #273885 in Accounting for Abdul

Question

On December 31, 2018, Company “A” had a loan commitment amounted 100,000 ., classified as follows:- 40,000 . as short-term, 60,000. as long-term. On January 10, 2019, the company agreed to refinance the loan commitments with an extra 10,000 . of interest, so the loan classifies as follows:-

25,000 . as short-term, 85,000 as long-term.

What’s the loans balance that’s should appear on the company’s financial statements, note that the financial statements were issued on February 12, 2019? Why

Answer 1

Solution:

The loans balance that should appear on the company’s financial statements on February 12, 2019, are as follows:

Short-term loans = 25,000

Long-term loans = 85,000

 

After reclassification of liabilities such as loans, the same should be updated on the financial statements to reflect the actual classifications.