On January 1, 2017, Keisler Company, a calendar-year company, issued $900,000 of notes payable, of which $225,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2017, is
A)Current liabilities, $900,000.
B)Long-term debt, $900,000.
C)Current liabilities, $225,000; Long-term Debt, $675,000.
D)Current liabilities, $675,000; Long-term Debt, $225,000.

Question

Quizplus · Accepted Answer

The portion of the notes payable that is due within one year should be classified as current liabilities, while the portion due after one year should be classified as long-term debt. Therefore, as of December 31, 2017, $225,000 of the notes payable would be due within one year (current liabilities), and the remaining $675,000 would be due after one year (long-term debt). Thus, the proper balance sheet presentation is Current liabilities, $225,000; Long-term Debt, $675,000.

On January 1, 2017, Keisler Company, a Calendar-Year Company, Issued