Question

0.58 points eBookPrintReferencesCheck my workCheck My Work button is now enabledItem 1 On December 1, 2018, your company borrowed $15,000, a portion of which is to be repaid each year on November 30. Specifically, your company will make the following principal payments: 2019, $2,000; 2020, $3,000; 2021, $4,000; and 2022, $6,000. Show how this loan will be reported in the December 31, 2019 and 2018, balance sheets, assuming principal payments will be made when required.

Answer 1

Answer:

Balance Sheets          2019       2018

Current liabilities:

Loan Payable         $3,000     $2,000

Long-term Liabilities:

Loan Payable       $10,000   $13,000

Explanation:

a) Data and Calculations:

Principal amount of loan on December 1, 2018 = $15,000

Repayments on November 30 each of the following years:

Year   Repayment  Loan Balance  Current   Long-term

                                                      Liabilities   Liabilities

Dec. 1, 2018            $15,000           $2,000      $13,000

2019,    $2,000        13,000              3,000        10,000

2020,   $3,000        10,000              4,000         6,000

2021,    $4,000         6,000              6,000                0

2022,  $6,000                 0                      0                0

Loan Payable:

December 31, 2018 = $15,000

December 31, 2019 = $13,000