Lulu Luxuries Company issued a four-year interest-bearing note payable for $200000 on January 1 2016. Each January the company is required to pay $50000 on the note. How will this note be reported on the December 31 2017 balance sheet?

Question

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By December 31, 2017, Lulu Luxuries Company would have made two annual payments of $50,000 each, reducing the principal to $100,000. The next payment of $50,000 due within a year (2018) is classified as a current liability, and the remaining $100,000 as long-term debt.

Lulu Luxuries Company Issued a Four-Year Interest-Bearing Note Payable for $200000