Question

on december 1, 2021, your company borrowed $15,000, a portion of which is to be repaid each year on november 30. specifically, your company will make the following principal payments: 2022, $2,000; 2023, $3,000; 2024, $4,000; and 2025, $6,000. show how this loan will be reported in the december 31, 2022 and 2021, balance sheets, assuming principal payments will be made when required.

Answer 1

The following is how this loan will be reported in Your Company's Balance Sheets:

Your Company

Balance Sheets

As of December 31

                                    2022        2021

Current Liabilities:

Loan Payable           $3,000    $2,000

Long-term Liabilities:

Loan Payable          $10,000   $13,000

Data and Calculations:

Dec. 1, 2021, Loan = $15,000

Repayment of Loan:

Date            Repayment  Dec. 31 Balance

Dec. 2021                $0         $15,000

Nov. 2022,      $2,000         $13,000

Nov. 2023,      $3,000         $10,000

Nov. 2024,      $4,000          $6,000

Nov. 2025,      $6,000                 $0

Thus, the loan payable in 2022 and 2023 will be shown under current liabilities in 2021 and 2022, respectively.  The remaining portion will appear under long-term liabilities.

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