Hilton Company issued a four-year interest-bearing note payable for $300,000 on January 1, 2009. Each January the company is required to pay $75,000 on the note. How will this note be reported on the December 31, 2010 balance sheet?

Question

Quizplus · Accepted Answer

The note is a long-term debt because it has a maturity of more than one year. The portion of the note that is due within one year is considered a current liability. As of December 31, 2010, two years have passed since the note was issued. Therefore, $150,000 of the note is considered long-term debt and $75,000 is considered a current liability.

Hilton Company Issued a Four-Year Interest-Bearing Note Payable for $300,000