B is corrent. The portion of bonds, notes, and other long-term debt that matures within the next year is called current maturities of long-term debt and is reported as a current liability. When only a part of certain long-term debt is to be paid in the next 12 months (such as with installment notes or serial bonds), the maturing part is reported as current and the balance as long-term. Therefore, Able should report $13,000 as current maturities of long-term debt ($3,000 note due in year 2, plus $10,000 installment of 8% note due in year 2). The sinking fund requirement ($4,000) is not debt.
A is incorrect. The portion of bonds, notes, and other long-term debt that matures within the next year is called current maturities of long-term debt and is reported as a current liability. When only a part of certain long-term debt is to be paid in the next 12 months (such as with installment notes or serial bonds), the maturing part is reported as current and the balance as long-term. Therefore, Able should report $13,000 as current maturities of long-term debt ($3,000 note due in year 2, plus $10,000 installment of 8% note due in year 2). The sinking fund requirement ($4,000) is not debt.
C is incorrect. The portion of bonds, notes, and other long-term debt that matures within the next year is called current maturities of long-term debt and is reported as a current liability. When only a part of certain long-term debt is to be paid in the next 12 months (such as with installment notes or serial bonds), the maturing part is reported as current and the balance as long-term. Therefore, Able should report $13,000 as current maturities of long-term debt ($3,000 note due in year 2, plus $10,000 installment of 8% note due in year 2). The sinking fund requirement ($4,000) is not debt.
D is incorrect. The portion of bonds, notes, and other long-term debt that matures within the next year is called current maturities of long-term debt and is reported as a current liability. When only a part of certain long-term debt is to be paid in the next 12 months (such as with installment notes or serial bonds), the maturing part is reported as current and the balance as long-term. Therefore, Able should report $13,000 as current maturities of long-term debt ($3,000 note due in year 2, plus $10,000 installment of 8% note due in year 2). The sinking fund requirement ($4,000) is not debt.
|
