Answered: liabilities

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter14: Long-term Liabilities: Bonds And Notes

Section: Chapter Questions

Problem 11E

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Question

Davis has the following obligations at December 31, 2025:  Note payable due in monthly installments of $50,000, plus interest, through November 30, 2026  Note payable due in monthly installments of $30,000, plus interest, through January 31, 2027.  Note payable originally due in quarterly installments of $60,000 plus interest through March 31, 2026 but refinanced on December 31, 2025 for quarterly installments of $80,000 plus interest through October 31, 2026.  Note payable issued on March 31, 2025 for $500,000 at 6% interest. Interest is paid every month and principal is due March 31, 2027.  Note payable issued on March 31, 2025 for $1,000,000 at 6% interest. Interest and principal are due March 31, 2026. Simple interest is used. Instructions

a. How much should Davis include in current liabilities at December 31, 2025?

b. How much should Davis include in long-term liabilities at December 31, 2025?

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