Question

Busch Company has these obligations at December 31. For each obligation, indicate whether it should be classified as a current liability, long-term liability, or both.

a. A note payable for $100,000 due in 2 years. select a balance sheet section
b. A 10-year mortgage payable of $200,000 payable in ten $20,000 annual payments.
c. Interest payable of $15,000 on the mortgage.
d. Accounts payable of $60,000.

Answer 1

Answer and Explanation:

The classification is as follows

a. It is a long term liability as it is due in 2 years i.e. more than one year

b. The $20,000 represent the current liability and the balance would be classified as the long term liability

c. The $15,000 represent the current liability

d. The account payable of $60,000 shows the current liability

In this way it should be classified