General Stores borrowed $50 000 at 6% interest on a long-term loan payable on 31 August.At 31 December,interest plus $10 000 of the principal are payable within one year.What is the account name and amount of a current liability that will be reported on the balance sheet as at 31 December?
A)Interest payable $600
B)Interest payable $1 000
C)Interest payable $3 000
D)Interest payable $2 000

Question

Quizplus · Accepted Answer

Interest payable for 4 months = $50 000 x 6% x 4/12 = $1 000Principal payable = $10 000Current liability = $1 000 + $10 000 = $11 000

General Stores Borrowed $50 000 at 6% Interest on a Long-Term