At December 31, 2017, Headland Company has outstanding three long-term debt issues. The first is...

Question:

At December 31, 2017, Headland Company has outstanding three long-term debt issues. The first is a $1,680,000 note payable which matures June 30, 2020. The second is a $5,210,000 bond issue which matures September 30, 2021. The third is a $11,130,000 sinking fund debenture with annual sinking fund payments of $2,226,000 in each of the years 2019 through 2023.

Prepare the required note disclosure for the long-term debt at December 31, 2017.

What Are Long-Term Liabilities:

A company must separate is Current and Long-Term Liabilities on the balance sheet according to GAAP. Long-Term Liabilities are those that the entity expects to settle at a point in time that is beyond 12 months (or one operating cycle) from the reporting date.

Answer and Explanation:

See below. The disclosure required for long-term debt involves showing the maturity of the various debt instruments that are classified as long term.

Instrument Maturing in 2018 Maturing in 2019 Maturing in 2020 Maturing in 2021 Maturing in 2022 Maturing in 2023
Note payable N/A 1,680,000
Bond N/A 5,210,000
Sinking fund debenture N/A 2,226,000 2,226,000 2,226,000 2,226,000 2,226,000

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Accounting for Long-Term Liabilities

from Accounting 101: Financial Accounting

Chapter 10 / Lesson 6
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