On December 31, 2020, Millers Grocery Inc. had a 10-year, 7% note payable balance of $100,000. The note payable was originally issued on June 30, 2011. The company will issue its financial statements on March 15, 2021. How will the note payable in each of the following separate scenarios be classified on the balance sheet of Millers Grocery on December 31, 2020? a. The company intends to pay off the note payable when it comes due. b. The company intends to refinance the note payable and will begin discussions with the lender in February 2021. c. The company issues common stock in January 2021. $75,000 of the proceeds of the issuance plus $25,000 in cash are used to pay off the loan. d. The company enters into a refinancing agreement dated January 31, 2021, which allows the issuance of debt up to 50% of the company's inventory balance, which is expected to be $175,000 during 2021. The interest rate in the refinancing agreement is 6.5% and the debt agreement expires on December 31, 2023. e. The full $100,000 was extinguished on February 1, 2021, when it was paid off with a $100,000, 8%, interest-bearing note payable, due February 1, 2026. f. Assume that the note payable was issued on June 30, 2020. The note payable includes a provision that allows for the lender to call the note at any time. However, the lender has indicated that it does not intend to call the note in 2021. g. Assume that the note payable was issued June 30, 2019, instead of December 31, 2020. Millers Grocery Inc. is in violation of a debt covenant that requires a current ratio of 1.5. Millers obtained a waiver of the debt covenant through September 2021 because it expects to be back at 1.5 by mid-year. a $100,000 b. $100,000 $ O Current liability 0 Long-term liability O Current liability 0 Long-term liability e. $100,000 f. $100,000 g $100,000 On December 31, 2020, Millers Grocery Inc. had a 10-year, 7% note payable balance of $100,000. The note payable was originally issued on June 30, 2011. The company will issue its financial statements on March 15, 2021. How will the note payable in each of the following separate scenarios be classified on the balance sheet of Millers Grocery on December 31, 2020? a. The company intends to pay off the note payable when it comes due. b. The company intends to refinance the note payable and will begin discussions with the lender in February 2021. c. The company issues common stock in January 2021. $75,000 of the proceeds of the issuance plus $25,000 in cash are used to pay off the loan. d. The company enters into a refinancing agreement dated January 31, 2021, which allows the issuance of debt up to 50% of the company's inventory balance, which is expected to be $175,000 during 2021. The interest rate in the refinancing agreement is 6.5% and the debt agreement expires on December 31, 2023. e. The full $100,000 was extinguished on February 1, 2021, when it was paid off with a $100,000, 8%, interest-bearing note payable, due February 1, 2026. f. Assume that the note payable was issued on June 30, 2020. The note payable includes a provision that allows for the lender to call the note at any time. However, the lender has indicated that it does not intend to call the note in 2021. g. Assume that the note payable was issued June 30, 2019, instead of December 31, 2020. Millers Grocery Inc. is in violation of a debt covenant that requires a current ratio of 1.5. Millers obtained a waiver of the debt covenant through September 2021 because it expects to be back at 1.5 by mid-year. a $100,000 b. $100,000 $ O Current liability 0 Long-term liability O Current liability 0 Long-term liability e. $100,000 f. $100,000 g $100,000
