Hilton Company issued a four-year interest-bearing note payable for $300,000 on January 1, 2011.Each January the company is required to pay $75,000 on the note.How will this note be reported on the December 31, 2012 statement of financial position?

Question

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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 a current liability. On December 31, 2012, the balance of the note is $225,000 ($300,000 - $75,000) and the portion of the note that is due within one year is $75,000.

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