Question

At December 31, 2020, Redmond Company has outstanding three long-term debt issues. The first is a $2,000,000 note payable which matures June 30, 2023. The second is a $6,000,000 bond issue which matures September 30, 2024. The third is a $12,500,000 sinking fund debenture with annual sinking fund payments of $2,500,000 in each of the years 2022 through 2026. Prepare the required note disclosure for the long-term debt at December 31, 2020.

Answer 1

Answer:

Year             Amount ($) (Disclosure amount for long term debt)                            

2021                    0

2022             2,500,000

2023             4,500,000                

2024             8,500,000                  

2025             2,500,000

Explanation:

The question is to show the required note disclosure of Redmon Company's Long term Debt at December 31, 2020

In order to do this, the note disclosure will take into cognisance the

Year             Amount ($) (Disclosure amount for long term debt)                            

2021                    0

2022             2,500,000

2023             4,500,000                

2024             8,500,000                  

2025             2,500,000

Workings:

Disclosure for 2023 = Annual sinking fund payment + the notes payable maturity = (2,000,000 + 2,500,000)  

Disclosure for 2024 = Annual sinking fund payment + the notes payable maturity = (6,000,000 + 2,500,000)