Included in Vernon Corp

question 51

Multiple Choice

Included in Vernon Corp.'s liability account balances at December 31, 2014, were the following:7% note payable issued October 1, 2014, maturing September 30, 2015 $250,0008% note payable issued April 1, 2014, payable in six equal annualinstallments of $150,000 beginning April 1, 2015 600,000Vernon's December 31, 2014 financial statements were issued on March 31, 2015. On January 15, 2015, the entire $600,000 balance of the 8% note was refinanced by issuance of a long-term obligation payable in a lump sum. In addition, on March 10, 2015, Vernon consummated a noncancelable agreement with the lender to refinance the 7%, $250,000 note on a long-term basis, on readily determinable terms that have not yet been implemented. On the December 31, 2014 balance sheet, the amount of the notes payable that Vernon should classify as short-term obligations is

• A) $175,000.
• B) $125,000.
• C) $50,000.
• D) $0.

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Definitions:

Subscription Price

The price at which existing shareholders can buy more shares of a company, typically during a rights issue.

Value Of A Right

The value to shareholders of the right to purchase new shares issued by a company at a discount to the market price.

Rights Offering

A financial opportunity offered to existing shareholders to purchase additional shares at a discounted price before the new shares are offered to the public.

Rights Offering

An opportunity given to existing shareholders to purchase additional shares of the company's stock, often at a discount, before it is offered to the public.