On July 1,2013,Avery Services Issued a 4% Long-Term Note Payable $$\begin{array} { | l | r | r | } \hline \text { Long-term notes payable } & 2,000 & \\\hline \text { Cash } & & 2,000 \\\hline\end{array}$$

question 99

Multiple Choice

On July 1,2013,Avery Services issued a 4% long-term note payable for $10,000.It is payable over a 5-year term in $2,000 principal installments on July 1 of each year.
-Which of the following entries needs to be made at July 1,2013 to reclassify the current portion of the note?

• A) \[\begin{array} { | l | r | r | }
• \hline \text { Long-term notes payable } & 2,000 & \\
• \hline \text { Cash } & & 2,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Current portion of long-term notes payable } & 2,000 & \\
• \hline \text { Long-term notes payable } & & 2,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | r | r | }
• \hline \text { Long-term notes payable } & 2,000 & \\
• \hline \text { Accounts payable } & & 2,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Long-term notes payable } & 2,000 & \\
• \hline \text { Current portion long-term notes payable } & & 2,000 \\
• \hline
• \end{array}\]

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Definitions:

Contract Price

The total amount agreed upon by the parties involved in a contract for the sale of goods, services, or property.

Quasi-Contract

A legal concept that implies a contract exists to prevent unjust enrichment or unfair benefit, even though no formal contract exists between the parties.

Compensatory Damages

Financial compensation awarded to a plaintiff to cover losses directly related to an injury or damage.

Reliance Interest

Refers to the compensation aimed at putting a party in the position they would have been in had a contractual promise not been made.