Business, 18.07.2020 23:01 Giabear23

The Tony Hawk Skate Park was built in early 2021. The construction was financed by a $3,000,000, 7% note due in 6 years, with required each month. The first year has not been as profitable as hoped. The discussion at the executive board meeting at the end of 2021 focused on the potential need to obtain additional financing. However, board members are concerned that the company's debt level at the end of 2021 will make the company appear By the end of 2022, the 12 monthly payments will reduce the balance by an additional $447,116. Separate from the note, the company has the following amounts at the end of 2021: current assets of $3,100,000; current liabilities of $2,700,000; total equity of $4,000,000. payments of $51,147 too risky to additional lenders. The balance of the note at the end of 2021 is $2,583,026. Jim Trost, the VP of finance, tells board members that he plans to classify the full balance of the note at the end of 2021 as long-term because the full length of the note is six years. He explains that lenders will be more willing to let the company borrow and will offer a lower interest rate if the company reports fewer current liabilities. Plus, he plans to tell lenders that there is no problem with long-term solvency because the company long-term profits will be used to pay its long-term debt. Required:
a. By how much does Jim's decision affect the reported amount of current liabilities versus long-term liabilities as of December 31, 2021?
b. Should the 12 monthly payments to be made during 2022 should be classified as current liabilities or long-term liabilities?
c. Calculate the current ratio and the debt to equity ratio at the end of 2021 (a) with and (b) without Jim's suggestion.
d. Can Jim's decision affect lenders?

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The Tony Hawk Skate Park was built in early 2021. The construction was financed by a $3,000,000, 7%...

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