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.

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.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter5: Introduction To Business Expenses

Section: Chapter Questions

Problem 61P

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