Cornerstone Markets has beginning long-term debt of $64,500,which is the principal balance of a loan payable to Centre Bank.During the year,the company paid a total of $16,300 to the bank,including $4,100 of interest.The company also borrowed $11,000.What is the value of the ending long-term debt?

Question

Quizplus · Accepted Answer

The calculation of the ending long-term debt is as follows:

Beginning long-term debt = $64,500
Loan payments made during the year = $16,300
Interest paid during the year = $4,100
Total reduction in long-term debt during the year = $16,300 - $4,100 = $12,200

New borrowing during the year = $11,000

Ending long-term debt = Beginning long-term debt - Total reduction in long-term debt during the year + New borrowing during the year
Ending long-term debt = $64,500 - $12,200 + $11,000 = $63,300

Therefore, the value of the ending long-term debt is $63,300, which corresponds to answer choice D.

Cornerstone Markets Has Beginning Long-Term Debt of $64,500,which Is the Principal