Jade Larson Antiques owes $20,000 on a truck purchased for use in the business. Assume the company makes timely principal payments of $5,000 each year at December 31 plus interest at 8%. Which of the following is true? a. After the first payment is made, the company owes $15,000 plus three years’ interest. b. After the first payment, $15,000 would be shown as a long-term liability. c. After the first payment is made, $5,000 would be shown as the current portion due on the long-term note. d. Just before the last payment is made, $5,000 will appear as a long-term liability on the balance sheet.

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter12: Current Liabilities
Section: Chapter Questions
Problem 12EA: Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank...
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Jade Larson Antiques owes $20,000 on a truck purchased for use in the business. Assume the company makes timely principal payments of $5,000 each year at December 31 plus interest at 8%. Which of the following is true?

a. After the first payment is made, the company owes $15,000 plus three years’ interest.

b. After the first payment, $15,000 would be shown as a long-term liability.

c. After the first payment is made, $5,000 would be shown as the current portion due on the long-term note.

d. Just before the last payment is made, $5,000 will appear as a long-term liability on the balance sheet.

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