On January 1, 2015, Donahue Company, a calendar-year company, issued $600,000 of notes payable, of which $150,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2015, is
A)Current Liabilities, $600,000.
B)Long-term Debt , $600,000.
C)Current Liabilities, $150,000; Long-term Debt, $450,000.
D)Current Liabilities, $450,000; Long-term Debt, $150,000.

Question

Quizplus · Accepted Answer

The amount due to be paid within the next year should be classified as current liabilities, which is $150,000. The remaining $450,000 will be due in more than one year and should be classified as long-term debt. Therefore, the proper balance sheet presentation on December 31, 2015, would be Current Liabilities of $150,000 and Long-term debt of $450,000.

On January 1, 2015, Donahue Company, a Calendar-Year Company, Issued