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? After the first payment is made, the company owes $15,000 plus three years’ interest.After the first payment, $15,000 would be shown as a long-term liability.After the first payment is made, $5,000 would be shown as the current portion due on the long-term note.Just before the last payment is made, $5,000 will appear as a long-term liability on the balance sheet.

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Answered: Jade Larson Antiques owes $20,000 on a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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?

After the first payment is made, the company owes $15,000 plus three years’ interest.
After the first payment, $15,000 would be shown as a long-term liability.
After the first payment is made, $5,000 would be shown as the current portion due on the long-term note.
Just before the last payment is made, $5,000 will appear as a long-term liability on the balance sheet.

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