Question

For the past several years, Farewell Distributors reported a long-term debt of $120,000 in its balance sheet. Next year, the company will begin paying off this debt in four annual installments of $30,000 each.
Required:
(a) How should Farewell’s $120,000 debt be reported in the company’s balance sheet at the end of the current year?
(b) Why is the proper balance sheet classification of a company’s liabilities important to the firm’s creditors and potential creditors?


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  • CreatedMarch 27, 2015
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