In October,you borrow $50,000,repayable in five years,at 8% annual interest,in order to buy new equipment.In March and again in September of the following year you pay half the annual interest to your creditors.Assuming no other long-term debt,what is the initial balance in the long-term debt account?
A)$54,000
B)$50,000
C)$46,000
D)$52,000

Question

Quizplus · Accepted Answer

The initial balance in the long-term debt account is simply the amount borrowed, which is $50,000. The fact that the interest is paid twice during the five-year period doesn't affect the initial balance.

In October,you Borrow $50,000,repayable in Five Years,at 8% Annual Interest,in