Purdum Farms Borrowed $10 Million by Signing a Five-Year Note

question 88

Multiple Choice

Purdum Farms borrowed $10 million by signing a five-year note on December 31,2017.Repayments of the principal are payable annually in installments of $2 million each.Purdum Farms makes the first payment on December 31,2018 and then prepares its balance sheet.What amount will be reported as current and long-term liabilities,respectively,in connection with the note at December 31,2018,after the first payment is made?

• A)$2 million in current liabilities and $8 million in long-term liabilities.
• B)$2 million in current liabilities and $6 million in long-term liabilities.
• C)Zero in current liabilities and $8 million in long-term liabilities.
• D)Zero in current liabilities and $10 million in long-term liabilities.

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Definitions:

Depression

A common and serious mood disorder characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities.

Loss Of Appetite

A decrease in the desire to eat, which can be a symptom of various underlying conditions, affecting nutritional intake and overall health.

Affective Disorder

A category of mental health disorders that primarily affect mood and emotions, such as depression and bipolar disorder.

Bipolar

A mental disorder characterized by periods of elevated mood and periods of depression.