On September 1, 2018, Southwest Airlines borrows $40.7 million, of which $9.4 million is due next year. Show how Southwest Airlines would record the $40.7 million debt on its December 31, 2018, balance sheet. (Enter your answers in dollars, not in millions (i. e. 5 should be entered as 5,000,000).)

Solution and Explanation:

Current Liabilities is calculated as follows:    

Current portion of long term debt = 9400000

Long term liabiities:    

Notes payable (40.7 - 9.40) = 31300000

Total Liabilities = 40700000

In order to calculate the total liabilities, all the current liabilities of a company and all the non-current liabilities of a company is to be added.

Basically, the term liability means that a company has to pay some amount of money or it owes some amount of money to a third person.      

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