Situation
You are the assistant accountant for Tyler Corporation. It is mid-January, 2008 and you are helping to prepare the Tyler Corporation’s balance sheet for December 31, 2007. Tyler will publish this balance sheet on March 1, 2008, after the auditors have completed their work. Tyler has a $100,000 note payable that was issued in 2006 and that is due March 6, 2008. On January 5, 2008, Tyler sold 2,000 shares of its $10 par common stock for $80,000. Its intent is to use these proceeds (plus $20,000 cash it already has on hand) to repay the note payable on March 6. The head accountant says “I’m not sure how to classify the $100,000 note payable on the December 31, 2007 balance sheet. Check this out for me.”

Directions
Research the related generally accepted accounting principles and prepare a short memo to the head accountant that explains how Tyler Corporation should report the $100,000 note payable on its December 31, 2007 balance sheet.