Analyzing Current Liabilities

Listed below are the current liability section and Note $7$ of the Year $7$ balance sheet of Joli Roma Corporation $($the Company$),$ a major oil company.

$ millions Year $7$ Year $6$

Current Liabilities

Current portion of long$-$term obligations $$131$ $$67$

Short$-$term obligations $518398$

Accounts payable $2,2472,397$

Accrued liabilities $785824$

Taxes payable $($including income taxes$)967748$

$$4,648$ $$4,434$

Note $7$ Short$-$Term Obligations

The Company$$s $$short$-$term obligations$$ consist of notes payable and commercial paper. Notes payable as of December $31,$ Year $7,$ totaled $$77$ million at an average annual interest rate of $5\mathrm{.}7\%,$ compared with $$22$ million at an average annual interest rate of $5\mathrm{.}7\%$ at year$-$end Year $6.$ Commercial paper borrowings at December $31,$ Year $7,$ were $$629$ million at an average annual interest rate of $5\mathrm{.}7\%$ compared with $$195$ million at an average annual interest rate of $5\mathrm{.}9\%$ as of December $31,$ Year $6.$

Bank lines of credit available to support existing commercial paper borrowings of the corporation amounted to $$441$ million at both December $31,$ Year $7$ and Year $6.$ All of these were supported by commitment fees.

The corporation also maintains compensating balances with a number of banks for various purposes. Such arrangements do not legally restrict withdrawal or usage of available cash funds. In the aggregate, they are not material in relation to total liquid assets.

Required

a$.$ Explain the origin of the $$131$ million current portion of long$-$term obligations in current liabilities of Year $7.$

The $$131$ million is the portion of the Company's Answer $1$

coming due in Year Answer $2$

$0$

and which the company expects to pay off in Year Answer $3$

$0$

b$.$ What amount of Joli Roma's long$-$term debt re$$ected in its current liabilities reported in Year $6$ did the Company pay o$$ in Year $7?$

The Company paid $Answer $4$

$0$

million in Year $7.$

c$.$ During Year $7,$ did the Company reduce its average yearly interest incurred on its short$-$term obligations described in Note $7?$

Assuming interest rates remained constant, the Company Answer $5$

its average interest obligations because short$-$term obligations Answer $6$

d$.$ Do the lines of credit that Joli Roma holds at the end of Year $7$ appear as liabilities on its balance sheet?

The lines of credit amounting to $Answer $7$

$0$

million Answer $8$

appear as liabilities on its balance sheet.