On December 31, 2010, the Williams Company had the following liabilities: $\begin{array}{ll}
\text { Trade accounts payable}&\$140,000\
\text {11 \% note payable, maturing in equal installments of \$ 30,000 }\
\text { per year on December } 30 \text { through } 2013 & 90,000 \
12 \% \text { note payable, issued O ctober } 15,2010 \text {, maturing } & \
\text { February } 15,2011 & 70,000
\end{array}$
On December 31, Williams signed a binding agreement with its bank to refinance the 12% note through February 14, 2013, at a variable interest rate.
What is the amount of Williams' current liabilities on December 31, 2010?
A)$140, 000
B)$170, 000
C)$230, 000
D)$300, 000

Question

On December 31, 2010, the Williams Company had the following liabilities: $\begin{array}{ll}
\text { Trade accounts payable}&\$140,000\
\text {11 \%  note payable, maturing in equal installments of \$ 30,000 }\
\text { per year on December } 30 \text { through } 2013 & 90,000 \
12 \% \text { note payable, issued O ctober } 15,2010 \text {, maturing } & \
\text { February } 15,2011 & 70,000
\end{array}$
 On December 31, Williams signed a binding agreement with its bank to refinance the 12% note through February 14, 2013, at a variable interest rate.
What is the amount of Williams' current liabilities on December 31, 2010?
A)$140, 000
B)$170, 000
C)$230, 000
D)$300, 000

Quizplus · Accepted Answer

The current liabilities on December 31, 2010, would include the accounts payable, notes payable, and current portion of long-term debt. From the given information, we can see that there is only one note payable of $100,000 with a 12% interest rate that needs to be refinanced. Therefore, the current portion of long-term debt would be $100,000. Additionally, we are not given any information about the accounts payable, so we cannot assume any amount for it. Therefore, the only known current liability is $100,000 for the note payable, and we add this to the $70,000 of accounts payable to get a total of $170,000 in current liabilities. Hence, the best choice is B.

On December 31, 2010, the Williams Company Had the Following