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PepsiCo, Inc., reported the following information about its long-term debt in the notes to a...

Question:

PepsiCo, Inc., reported the following information about its long-term debt in the notes to a recent financial statement (in millions): Long-term debt is comprised of the following:

Current year Preceding year
Total long term debt 28359 26773
Less current portion 4815 6205
Long term debt 23544 20568

a. How much of the long-term debt was disclosed as a current liability on the current year's December 31 balance sheet?

b. How much did the total current liabilities change between the preceding year and the current year as a result of the current portion of long-term debt?

c. If PepsiCo did not issue additional long-term debt next year, what would be the total long-term debt on December 31 of the upcoming year?

Long term debt:

Long term debts are the financial instrument used by the organization to raise finance. It is also considered as a cheaper source of finance because the interest on these debts is a tax saving expense. The debenture, bonds and long-tern loan are the examples of long term debt.

Answer and Explanation:

Answer A

Current Liability = Total long term debt - Long term debt

Current year

Current liability = ( $ 28,359 - $ 23,544) = $ 4815.

Answer B

Change in current liabilities = Current Liabilities at the end - Current liability at the Beginning.

Current Liabilities at the end = 4815.

Current Liabilities at the Beginning. = 6205

Change in current liabilities = 4815 - 6205 = -1390

So there is a decrease in the current liabilities by 1390 in comparison to last year.

Answer C

If the organization has not paid any amount of long term debt, then the long term debt balance will remain the same as 20,568.


Learn more about this topic:

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Long-Term Debt: Definition, Cost & Formula

from Financial Accounting: Help and Review

Chapter 8 / Lesson 7
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