On August 15, 2016, Sassycat Designs signed a $30,000 8% 15-year installment note which requires annual payments of $2,000 plus interest. Sassycat will classify this loan on the December 31, 2016 Balance Sheet as $2,000 current portion of long-term debt and $30,000 long-term debt.

Question

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The $30,000 should not be fully classified as long-term debt on the December 31, 2016 balance sheet because part of it is being paid off in the next year. The correct classification would include the current portion of the debt that is due within the next year (which includes the $2,000 annual payment plus the interest for the year) and the remaining balance as long-term debt.

On August 15, 2016, Sassycat Designs Signed a $30,000 8