Question

On January 1, 2015, Donahue Company, a calendar-year company, issued $600,000 of notes payable, of which $150,000 is due on January 1 for each of the next four years. The proper balance sheet presentation on December 31, 2015, is

A) Current Liabilities, $600,000.
B) Long-term Debt , $600,000.
C) Current Liabilities, $150,000; Long-term Debt, $450,000.
D) Current Liabilities, $450,000; Long-term Debt, $150,000.

Answer 1

The proper balance sheet presentation for Donahue Company on December 31, 2015, shows $150,000 as Current Liabilities and $450,000 as Long-term Debt.

Step-by-step explanation:

The proper balance sheet presentation on December 31, 2015, for Donahue Company would be Option C) Current Liabilities, $150,000 and Long-term Debt, $450,000.

The $150,000 due on January 1 for each of the next four years should be classified as current liabilities because it is payable within the next year. The remaining balance of $450,000 would be classified as long-term debt since it is payable after one year.

This classification ensures that the company accurately reflects its short-term and long-term obligations on the balance sheet.