Problem 1-14 (AICPA Adapted)

Dean Company has a P2,000,000 note payable due June 30, 2021. On December 31,
2020, the entity signed an agreement to borrow up to P2,000,000 to refinance the note
payable on a long-term basis, the entity signed due June 30, a long- term up to
P2,000,000

The financing agreement called for borrowing not to exceed 80% of the value of the
collateral the entity was providing.

On December 31, 2020, the value of the collateral was P1,500,000

On December 31, 2020, what amount of the note payable should be reported as current
liability?
a. 2,000,000 b. 1,500,000 c. 800,000 d. 500,000

Problem 1-15 (AICPA Adapted)

Willem Company reported the following liabilities on December 31, 2020:

Accounts payable 750,000

Short-term borrowings 400,000
Mortgage payable, current portion P100,000 3,500,000
Bank loan payable, due June 30, 2021 1,000,000

The P1,000,000 bank loan was refinanced with a 5-year loan on January 15, 2021, with
the first principal payment due January 15, 2022.

The financial statements were issued February 28, 2021.

What total amount should be reported as current liabilities on December 31, 2020?

a. 1,150,000 b. 2,250,000 c. 1,250,000 d. 850,000