On December 31,2019,Sandy Company has a Note Receivable of $9,000.The note will be collected in installments.$1,800 is due on December 31,2020 and $1,800 is due every year after December 31,2020.The classification of the note on Sandy Company's balance sheet at December 31,2019 is:
A)all $9,000 is a current asset.
B)all $9,000 is a long term asset.
C)$1,800 is a current asset and $7,200 is a long-term asset.
D)$7,200 is a current asset and $1,800 is a long-term asset.

Question

Quizplus · Accepted Answer

At the time of issuing the note, the entire amount of $9,000 is a long-term asset. However, as a portion of the note, i.e., $1,800, is due within a year, it is a current asset. The remaining balance of $7,200 is a long-term asset. Therefore, the best choice is option C as $1,800 is a current asset, and $7,200 is a long-term asset.

On December 31,2019,Sandy Company Has a Note Receivable of $9,000