On July 1, 2011, Riviera Manufacturing Co. issued a five-year note payable with a face amount of $250,000 and an interest rate of 10 percent. The terms of the note require Riviera to make five annual payments of $50,000 plus accrued interest, with the first payment due June 30, 2012. With respect to the note, the current liabilities section of Riviera's December 31, 2011, balance sheet should include

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Riviera issued a five-year note payable with a face amount of $250,000 and an interest rate of 10 percent. It means the annual interest expense will be $25,000 ($250,000 × 10%). Riviera has to pay $50,000 ($25,000 + $25,000) plus accrued interest for each of five years as stated in the question. 
Since the note is payable within the current year (June 30, 2012), Riviera needs to record a current liability at December 31, 2011, for the first payment which will be due within the next 12 months. 
Accrued interest from the date of the note (July 1, 2011) to December 31, 2011, would be $12,500 ($250,000 ÷ 2 × 10% × 6/12). 
Therefore, the current liabilities section of Riviera's December 31, 2011, balance sheet should include $50,000 for the first payment due June 30, 2012, and $12,500 for accrued interest, for a total of $62,500.