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?

Question

Quizplus · Accepted Answer

Since the company expects to repay the debt evenly over the next four years, a portion of the debt will become due in the current year. This portion is called the current portion of long-term debt and will be shown separately on the balance sheet. The remaining portion of the debt will be shown as long-term debt. Therefore, the best choice is B, which shows the current portion of long-term debt as $1,250,000 and the remaining long-term debt as $3,750,000.

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