Lionworks Inc. signed a $57,000 8% 30-year installment note on November 1, 2016. The note requires semiannual payments of $950 plus interest on May 1 and November 1 of each year. How will Lionworks classify this loan on its December 31, 2016 Balance Sheet?
A)Current Portion of Long-term debt, $0; Long-term debt, $57,000
B)Current Portion of Long-term debt, $57,000; Long-term debt, $0
C)Current Portion of Long-term debt, $950; Long-term debt, $56,050
D)Current Portion of Long-term debt, $1,900; Long-term debt, $55,100

Question

Quizplus · Accepted Answer

The current portion of long-term debt is the amount due within the next year. Since the payments are semiannual, two payments of $950 each are due within the next year, totaling $1,900. The remaining balance of $55,100 is classified as long-term debt.