Muffin Company issued a five-year, interest-bearing note payable for $50,000 on January 1, 2017. Each January the company is required to pay $10,000 on the note. How will this note be reported on the December 31, 2018 balance sheet?
A) Long-term debt, $50,000
B) Long-term debt, $40,000
C) Long-term debt, $30,000; Long-term debt due within one year, $10,000
D) Long-term debt of $40,000; Long-term debt due within one year, $10,000

Question

Quizplus · Accepted Answer

The note is a long-term debt because it has a maturity of more than one year. The balance of the note payable on December 31, 2018, is $30,000 ($50,000 - $10,000 - $10,000). The $10,000 due on January 1, 2019, is a current liability.

Muffin Company Issued a Five-Year, Interest-Bearing Note Payable for $50,000