Problem 13-12 Various liabilities: balance sheet classification: prepare liability section of balance sheet; write footnotes (LO13-4, LO13-5) Transit Airlines provides regional jet service in the Mid South. The following is information on liabilities of Transit at December 31, 2018 Transit's fiscal year ends on December 31. lts annual financial statements are issued in April 1. Transit has outstanding 6.8% bonds with face amount of 562 million. The bonds mature on July 31, 2027 Bondholders have the option of calling (demanding payment on the body on July 31, 2019, at a redemption price of $62 million. Market conditions are such that the call option is not expected to be exercised 2. A $48 million 6% bank loans payable on October 31 2024. The bank has the right to demand payment after any fiscal year-end in which Transit's ratio of current assets to current liabilities fails below a contractual minimum of 19 to 1 and remains so for 6 months. That ratio was 175 on December 31, 2018. due primarily to an intentional temporary decline in parts inventories. Normal inventory levels will be reestablished during the sixth week of 2019. 3. Transit management intended to refinance $37 million of 4% notes that mature in May of 2019. In late February 2019. prior to the issuance of the 2018 financial statements Transit negotiated a line of credit with a commercial bank for up to $33 million any time during 2019 Any borrowings will mature two years from the date of borrowing 4. Transit is involved in a lawsuit resulting from a dispute with a food caterer On February 13, 2019. judgment was rendered against Transit in the amount of $39 million plus interest a total of $40 million Transit plans to appeal the judgment and is unable to predict it outcome though it is not expected to have a material adverse effect on the company Required: 1. How should the 68% bonds be classified by Transit anong liabilities in its balance sheet? 2. How should the 6 bank loan be classified by Transit among liabilities in its balance sheet? 3. How should the 4% notes be classified by Transit among liabilities in its balance sheet? 4. How should the lawsuit be reported by Transit? 5. Calculate the total current liabilities, total long-term liabilities, and total liabilities of a classified balance sheet for Transit Airlines at December 31, 2018. Transit's accounts payable and accruals were $58 million Complete this question by entering your answers in the tabs below. Reg 1 to 4 Reas How should the 6.8% bonds, 6% bank loan and 4% notes be dassified by Transit among liabilities in its balance sheet How should the lawsuit be reported by Transit? (Fnter your answers in ons milion milion 4 The lawut should be reported as: ReS >