Jamison Company has the following obligations at December 31: For each obligation, indicate whether it should be classified as a current liability. (Assume an operating cycle of less than one year.) a. A note payable for $100,000 due in 2 years. b. A 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments. c. Interest payable of $15,000 on the mortgage. d. Accounts payable of $60,000.

Question

Gavyn Norris

Business

18 February, 13:09

Jamison Company has the following obligations at December 31: For each obligation, indicate whether it should be classified as a current liability. (Assume an operating cycle of less than one year.) a. A note payable for $100,000 due in 2 years. b. A 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments. c. Interest payable of $15,000 on the mortgage. d. Accounts payable of $60,000.

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Lilianna Bender · Answer 1

The current liability is that liability in which the obligation is arise for one year or less than one year.

So, the categorization is shown below:

a. A note payable for $100,000 due in 2 years. = It is not a current liability as it is due in 2 years that come under the long term liability

b. A 10-year mortgage payable of $300,000 payable in ten $30,000 annual payments. = Current liability for first annual payment only and rest is consider to be long term liability

c. Interest payable of $15,000 on the mortgage. = Current liability as it is arise within one year

d. Accounts payable of $60,000. = Current liability as it is arise within one year

The current liability is shown on the liabilities side of the balance sheet.