Martin, Inc. is preparing its financial statements for December 31, 2018. Martin has a $2,200,000 short-term note that is due in June, 2019. Martin has an existing long-term line of credit of $1,000,000, which will be used to remove part of the short-term debt. Due to the existing long-term line of credit, the company will report how much short-term liability?
A) $0
B) $1,200,000
C) $2,200,000
D) $1,000,000

Question

Quizplus · Accepted Answer

Martin, Inc. can use the $1,000,000 long-term line of credit to refinance part of the $2,200,000 short-term note, leaving $1,200,000 as a short-term liability.