Question

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.

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

Step-by-step 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