Venus Ltd.secured a $750,000, five year, 8% note payable on January 1.The loan will be repaid using blended monthly payments with a fixed monthly principal payment of $12,500.Which of the following represents how the loan will be reflected on the balance sheet at the end of the first year?

Question

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The loan will be repaid with a fixed monthly principal payment of $12,500. Over 12 months, this amounts to $150,000 ($12,500 x 12). Therefore, at the end of the first year, the current portion of the long-term debt (the amount to be paid within the next year) is $150,000. The remaining balance of the loan ($750,000 - $150,000) is $600,000, which is classified as long-term liabilities. However, there seems to be a mistake in the options provided as none correctly reflects the remaining long-term liability based on the given calculation. The correct approach to reflect the balance would involve recognizing $150,000 as the current portion and the remaining $600,000 as long-term, but this option is not provided.

Venus LtdSecured a $750,000, Five Year, 8% Note Payable on January