Holbert Corporation has $2,500,000 of short-term debt it expects to retire with proceeds from the sale of 75,000 shares of common stock.If the stock is sold for $20 per share subsequent to the balance sheet date, but before the balance sheet is issued, what amount of short-term debt could be excluded from current liabilities?
A)$1,500,000
B)$2,500,000
C)$1,000,000
D)$0

Question

Quizplus · Accepted Answer

The proceeds from the sale of 75,000 shares of common stock is $1,500,000 ($20 per share x 75,000 shares), which can be used to retire the short-term debt. Therefore, $1,500,000 of the short-term debt can be excluded from current liabilities.

Holbert Corporation Has $2,500,000 of Short-Term Debt It Expects to Retire