On August 15,2014,Woods Design signed a $20,000 7% 10-year installment note which requires annual payments of $4,000 plus interest.Woods will classify this loan on the December 31,2014 Balance Sheet as $4,000 current portion of long-term debt and $20,000 long-term debt.

Question

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The $4,000 current portion of the debt should be classified as current liability, while the remaining $16,000 should be classified as long-term debt, not the full $20,000.

On August 15,2014,Woods Design Signed a $20,000 7% 10-Year Installment