On November 1,2012,EZ Products borrowed $48,000 on a 5%,10-year note with annual installment payments of $4,800 plus interest due on November 1 of each succeeding year.
-How will the note be shown on the balance sheet dated December 31,2012?
A) $48,000 shown as current liability only
B) $4,800 shown as current liability, $48,000 shown as long-term liability
C) $4,800 shown as current liability, $43,200 shown as long-term liability
D) Entire $48,000 shown as long-term liability

Question

Quizplus · Accepted Answer

The current portion of the note payable, which is the payment due within the next 12 months, is $4,800. This amount should be shown as a current liability on the balance sheet as of December 31, 2012. The remaining balance of the note payable is $43,200 ($48,000 - $4,800), which should be shown as a long-term liability on the balance sheet. Therefore, choice C is correct.

On November 1,2012,EZ Products Borrowed $48,000 on a 5%,10-Year Note