Topic 1: Accounting for debt is important in businesses. Understanding the accounting for current and long-term liabilities is important in understanding the solvency of a business. In this Discussion, you will look at how businesses finance operations through debt.
Rayborn Company obtains $20,000 in cash by signing a 9%, 6-month, $20,000 note payable to First Bank on July 1. Rayborn’s fiscal year ends on September 30. What information should be reported for the note payable in the annual financial statements? What disclosure is required? Why is this important?