**Loan Repayment and Long-term Liability Calculation**On January 2, 2018, Keystone Company borrowed $60,000 from Bank Three. The loan was structured to be repaid in equal principal installments of $10,000, payable on December 31 each year, starting on December 31, 2018. Disregarding interest, the task is to determine the amount of the $60,000 loan that should be considered a long-term liability on the company's balance sheet for the year ending December 31, 2019.**Options:**- $30,000- $40,000 (Correct Answer)- $50,000- $20,000- None of the above### Explanation:The loan amount on the balance sheet is divided into short-term and long-term liabilities. As of December 31, 2019, Keystone Company would have made two payments of $10,000 each (on December 31, 2018, and December 31, 2019), reducing the principal.**Remaining Principal Balance:**- Original Loan: $60,000- Payments Made by End of 2019: $20,000 (2 payments of $10,000)- Remaining Loan Balance: $60,000 - $20,000 = $40,000Thus, $40,000 would be classified as a long-term liability at the end of 2019.

Solution: Total borrowings = $60,000 Annual payments = $10,000 Balance borrowings at Dec, 31, 2019 =…

On January 2, 2018, Keystone Company borrowed $60,000 from Bank Three. The loan was to be repaid in equal principal installments of $10,000, payable on December 31 of each year, beginning on December 31, 2018. Disregarding interest, the amount of the $60,000 loan that should be considered a long-term liability on the company's balance sheet for the year ended December 31. 2019 would be:

On January 2, 2018, Keystone Company borrowed $60,000 from Bank Three. The loan was to be repaid in equal principal installments of $10,000, payable on December 31 of each year, beginning on December 31, 2018. Disregarding interest, the amount of the $60,000 loan that should be considered a long-term liability on the company's balance sheet for the year ended December 31. 2019 would be:

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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