Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 10 - Reporting and Analyzing Liabilities - Brief Exercises: BE10-1

Answer

From the list given, we will identify them keeping in view the above statement: a) A note payable for 100,000 dollars due in 2 years - is not maturing within one year, so this will be classified as a current liability. b) A 10-year mortgage payable of 200,000 dollars payable in ten 20,000 dollars annual payments. Only 20,000 dollars is payable within one year, so this will be the only amount which can be classified as current liability. c) Interest payable of 15,000 dollars on the mortgage is a current liability. d) Accounts payable of 60,000 dollars is a current liability.

Work Step by Step

The current liabilities are payable within one year or the operating cycle, whichever is longer.
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