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Your client Anderson Company owes a note to the bank in the amount of $1,000,000 due February 1, 2015. The bank has agreed to refinance $500,000 of the note on a long term basis if the company can pay the other $500,000 by the due date. An investor also has offered to buy $300,000 of common stock in the company on January 15, 2015. Anderson has agreed to sell the stock to the investor. If Anderson intends to refinance $500,000 of the debt with the bank and use the $300,000 from the sale of stock to pay against the loan, how should Anderson report the $1,000,000 loan on its December 31, 2014 financial statements? Required: Explain the proper reporting of the loan, including your justification for doing so.

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M91528945

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