Keller Company issued a five-year interest-bearing note payable for $200,000 on January 1, 2013. Each January the company is required to pay $40,000 on the note. How will this note be reported on the December 31, 2014, balance sheet?
A) Long-term debt, $200,000
B) Long-term debt, $160,000
C) Long-term debt, $120,000; Long-term Debt due within one year, $40,000
D) Long-term debt of $160,000; Long-term Debt due within one year, $40,000

Question

Quizplus · Accepted Answer

By December 31, 2014, two payments of $40,000 each would have been made, reducing the long-term debt to $120,000. The next $40,000 payment due within one year is classified separately as "Long-term Debt due within one year."

Keller Company Issued a Five-Year Interest-Bearing Note Payable for $200,000