Question

Kim’s Academy had $10,000,000 of X-bonds payable due in 2022. Prior to 12/31/2021, Kim’s refinanced $3,000,000 of the X-bonds with other bonds that mature in 2032. On January 15, 2022, Kim’s refinanced another $2,000,000 of the X- bonds with others that mature in 2029. Kim’s issued its financial statements on February 1, 2022. On February 15, 2022, Kim’s refinanced another $4,000,000 of the X-bonds with others that mature in 2030. In its 2021 financial statements, Kim’s should show noncurrent bonds payable of:
a. $2,000,000
b. $3,000,000
c. $5,000,000
d. $9,000,000

Answer 1

Answer:

b. $3,000,000

Explanation:

As at end of 2021, noncurrent bonds payable are those amounts to be matured in 2022.

At the beginning, Kim’s Accademy had $10,000,000 of X-bond payable due in 2022 which is consider current bond payable as it will be matured in next coming year.

But then prior to 12/31/2021, Kim’s refinanced $3,000,000 of the X-bonds with other bonds that mature in 2032; so the bond payables as of end of 2021 include $3,000,000 of noncurrent bond and $7,000,000 of current bonds.