At the Beginning of the First Quarter,your Company Borrows $20,000

question 44

Multiple Choice

At the beginning of the first quarter,your company borrows $20,000 for four years at 8% interest and has to repay $5,000 of principal each year.Interest is paid at the end of the second and fourth quarters,and the principal is due at the end of the year.How would this information be reported on the balance sheet at the end of the first quarter?

• A)$400 as interest expense and $20,000 under long-term debt.
• B)$400 as interest payable,$5,000 as current portion of long-term debt under current liabilities,and $15,000 under long-term debt.
• C)$1,600 of interest under current liabilities,$5,000 as current portion of long-term debt under current liabilities and $15,000 under long-term debt.
• D)$400 as interest payable under current liabilities and $20,000 under long-term debt.

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