As of January 1, 20X9, Darnell\'s Deliveries owes $60,000 on a truck purchased f
ID: 2334967 • Letter: A
Question
As of January 1, 20X9, Darnell's Deliveries owes $60,000 on a truck purchased for use by the business. The company makes principal payments of $1,000 each month plus interest at 8%. At the end of 20X9, after the first 12 months' payments of principal and interest, which of the following would be included on the balance sheet for December 31, 20X9 A. Long-term Liabilities $48,000 and Interest Payable for four years' interest. B. Long-term Liabilities $36,000; Current Liabilities $12,000; and Interest Payable for four 8. years' interest C. Long-term Liabilities $36,000; Current Liabilities $12,000; and no Interest Payable D. Long-term Liabilities $48,000 and no Interest Payable
Explanation / Answer
Total principal payment during 2019 = 1000 *12 = $ 12000
Loan outstanding at end of 2019= 60000-12000= 48000
The amount of loan that is payable within12 months from the end of reporting period (31 dec 2019 ) is classified as current liability and rest will be classified as non current
current liability = 1000*12=12000 payable next year
non current liability = 48000-12000 = 36000
correct option is "C"
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