The Blueberry Company issued a five-year interest-bearing note payable for $75,000 on January 1, 2011. Each January the company is required to pay $15,000 on the note. How will this note be reported on the December 31, 2012, balance sheet?
A) Long-term Debt, $75,000.
B) Long-term Debt, $60,000.
C) Long-term Debt, $45,000; Long-term Debt due within one year, $15,000.
D) Long-term Debt of $60,000; Long-term Debt due within one year, $15,000.

Question

Quizplus · Accepted Answer

The note will be reported as Long-term Debt of $45,000 and Long-term Debt due within one year of $15,000. This is because by December 31, 2012, two annual payments of $15,000 each would have been made, reducing the original amount of $75,000 to $45,000. The next payment of $15,000 due within a year is classified as a current liability.

The Blueberry Company Issued a Five-Year Interest-Bearing Note Payable for $75,000