QUESTION 12 Hillwood Clinic has borrowed $90,000 from the bank with the following terms: $20,000 of...
QUESTION 12
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Hillwood Clinic has borrowed $90,000 from the bank with the following terms: $20,000 of this amount to be paid in Year 1, $30,000 to be paid in Year 2, and $40,000 to be paid in Year 3. Time moves on, and Hillwood meets the terms of the note in Year 1. Therefore at the beginning of Year 2 the remaining portion of the loan is now classified as follows:
$70,000 long-term note payable
$30,000 short-term note payable plus $40,000 long-term note payable
$20,000 short-term note payable plus $50,000 long-term note payable
None of the above
Homework Answers
Ans: The correct option for the answer is option B i.e. $30,000 short term payable and $40,000 long term payable
Explanation
Total loan= $90,000
paid in year 1 - 20,000
Left amt for Year 2 in beginning to year 3= 70,000
Given $30,000 to be paid in year 2 therefore $30,000 will be short payable and left amount i.e. $40,000 will be Long term payable
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QUESTION 12
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