A company has $5,000,000 in long-term debt outstanding.They expect to repay it evenly over the next four years.Which of the following represents how it will be shown on the year-end balance sheet?
A)Accounts payable: $1,250,000, Long-term debt: $3,750,000
B)Current portion of long-term debt: $1,250,000, Long-term debt: $3,750,000
C)Current portion of long-term debt: $2,500,000, Long-term debt: $2,500,000
D)Long-term debt: $5,000,000

Question

Quizplus · Accepted Answer

The current portion of long-term debt represents the amount of the long-term debt that is due in the current year. Since they expect to repay the debt evenly over the next four years, $1,250,000 of the debt is due in the current year and should be classified as the current portion of long-term debt on the balance sheet. The remaining $3,750,000 of the debt should be classified as long-term debt. Therefore, the correct choice is B.

A Company Has $5,000,000 in Long-Term Debt Outstanding