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:

Franchised Restaurant

A restaurant that operates under the branding and operational guidelines of a larger chain, typically through a licensing agreement.

Sharing Contracts

A type of franchising agreement under which the franchisee pays the franchisor a percentage of revenue rather than a fixed fee.

Marginal Benefit

The additional benefit received from consuming one more unit of a good or service.

Franchising

A business model wherein a business owner licenses their business logo, name, and operating model to an external party or franchisee.