Assume that on December 1, 2015, your company borrowed $45,000, a portion of which is to be repaid each year on November 30. Specifically, your company will make the following principal payments: 2016, $6,000; 2017, $9,000; 2018, $12,000; and 2019, $18,000. 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.

Question

Randy

Business

29 November, 10:47

Assume that on December 1, 2015, your company borrowed $45,000, a portion of which is to be repaid each year on November 30. Specifically, your company will make the following principal payments: 2016, $6,000; 2017, $9,000; 2018, $12,000; and 2019, $18,000. 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.

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Camille Joyce · Answer 1

2016 2015

Current liabilities

Current portion of long term debt $9,000 $6,000

Long term liabilities

Long term debt $30,000 $39,000

Total liabilities $39,000 $45,000

Explanation:

According to the scenario, the computation of the given data are as follows:

As, in 2015 total amount borrowed = $45,000

Out of which $6,000 is due on Nov. 30 2016

So, Remaining for 2016 is $45,000 - $6,000 = $39,000

Out of which $9,000 is due on Nov. 30 2017

So, the balance sheet are as follows:

2016 2015

Current liabilities

Current portion of long term debt $9,000 $6,000

Long term liabilities

Long term debt $30,000 $39,000

Total liabilities $39,000 $45,000