Question

Assume that on December 1, 2015, your company borrowed $36,000, a portion of which is to be repaid each year on November 30. Specifically, your company will make the following principal payments: 2016, $4,800; 2017, $7,200; 2018, $9,600; and 2019, $14,400. Show how this loan will be reported in the December 31, 2016 and 2015 balance sheets, assuming that principal payments will be made when required.

Answer 1

The balance sheet extract in respect of the loan can be found below:

Step-by-step explanation:

In the balance sheet of December 31 2015,a portion of the loan repayable would in 2016 would be shown as current liabilities as shown below

Also,In the balance sheet of December 31 2016,a portion of the loan repayable would in 2017 would be shown as current liabilities as shown below

Balance sheet extract on December 31 2015 and 2016

2016 2015

Current liabilities

Current portion of long-term loan $7200 $4,800

Non-Current liabilities

Long-term debt $24,600 $31,800

Total liabilities $31,800 $36,000