Question

At the beginning of the year, Shinedown, Corp., had a long-term debt balance of $47,880. During the year, the company repaid a long-term loan in the amount of $14,205. The company paid $5,650 in interest during the year, and opened a new long-term loan for $12,450. How much is the ending long-term debt account on the company's balance sheet

Answer 1

Shinedown, Corp.

The ending long-term debt account on the company's balance sheet is:

= $46,125

Step-by-step explanation:

a) Data and Calculations:

Interest expense for the year = $5,650

Beginning long-term debt balance = $47,880

Repayment of a long-term loan (14,205)

New long-term loan 12,450

Ending long-term debt balance = $46,125

b) This means that the long-term debt was reduced by a small difference from $47,880 to $46,125 because of the repayment of a loan and the addition of a new loan to the debt portfolio. Adding and subtracting the new loan and the old repayment give the balance at the end of the year as $46,125.