In: Accounting
Hoover Company signs a four month promissory note for $ 270,000 on January 31, 2016. The company is required to pay $ 67, 500 on the note each month. The first payment is on February 1, 2016, and the final payment is on May 1, 2016. How will this note be reported on the balance sheet at January 31, 2016?
Current Liabilities are shown under ‘Liabilities’ on the Balance Sheet.
--Monthly payment = $ 67,500
--This means that full Note Payable will be repaid in 4 months (67500 x 4 =270000)
--Since whole of the amount of Notes Payable is to be made within a year (and a very near future), this Note will be reported on the Balance Sheet at $ 270,000 under “Current Liabilities” heading of “Liabilities” on Balance Sheet at January 31, 2016.