Question

It is not completely correct. I am not sure what is missing. please help

0 Barton Chocolates used a promissory note to borrow $2,000,000 on July 1, 2015, at an annual interest rate of 9 percent. The note is to be repaid in yearly installments of $400,000, plus accrued interest, on June 30 of every year until the note is paid in full (on June 30, 2020). Show how the results of this transaction would be reported in a classified balance sheet prepared as of December 31, 2015. (Do not round intermediate 88 oints calculations.) Answer is not complete. BARTON CHOCOLATES Balance Sheet (partial) As of December 31, 2015 Current Liabilities $ Interest Payable 90,000 Current Portion of Long-term Debt 400,000 Total Current Liabilities 490.000

Answer 1

Solution

Barton Chocolates

Balance sheet (partial)

Barton Chocolates
Balance Sheet (Partial)
At December 31
Current Liabilities
Interest Payable	$90,000
Current Portion of Long-Term Debt	$400,000
Total Current Liabilities	$490,000
Long-Term Liabilities
Notes Payable	$1,600,000
Total	$2,090,000

Computations:

Interest expense, July 1 – December 31= $2,000,000 x 9% x 6/12 = $90,000

The company would pay $400,000 every year, this gradually reduces its long term liability by the time of maturity, December 31, 2020. The company has to report both its current liability as well as the long term liabilities in the balance sheet.

Answer 2

Notes payable (long term) is what was missing and for this it is 1,200,000 because you subtract the 400,000 you already paid from it.