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On January 1, 2013, Donahue Company, a calendar-year
company, issued $500,000 of notes payable, of which $125,000 is
due on January 1 for each of the next four years. The proper
balance sheet presentation on December 31, 2013, is
Current Liabilities, $125,000; Long-term Debt, $375,000.
Current Liabilities, $375,000; Long-term Debt, $125,000.
Current Liabilities, $500,000.
Long-term Debt , $500,000.
9- Multiple Choice Question 76
When an interest-bearing note matures, the balance in the Notes
Payable account is
less than the total amount repaid by the borrower.
the difference between the maturity value of the note and the face
value of the note.
equal to the total amount repaid by the borrower.
greater than the total amount repaid by the borrower
10-Multiple Choice Question 125
From the standpoint of the issuing company, a disadvantage of
using bonds as a means of long-term financing is that
interest must be paid on a periodic basis regardless of earnings.
the bondholders do not have voting rights.
income to stockholders may increase as a result of trading on the
equity.
bond interest is deductible for tax purposes.
11-Multiple Choice Question 194