3. Study the following amortization schedule for a five-year note. Suppose that you are going to prepare a financial statement at the end of year number 2.

The financial statement must present:

a. $92,866 as long-term debt.

b. $26,999 as short-term debt and $65,867 as long-term debt.

c. $40,000 as short-term debt and $80,000 as long-term debt.

d. $120,000 as long-term debt.

\begin{tabular}{|r|r|r|r|r|} \hline Year & Payment & Interest & Principal & \multicolumn{1}{|c|}{ Balance } \\ \hline & & & & $137,325 \\ \hline 1 & $40,000 & $19,225 & $20,775 & 116,550 \\ \hline 2 & 40,000 & 16,316 & 23,684 & 92,866 \\ \hline 3 & 40,000 & 13,001 & 26,999 & 65,867 \\ \hline 4 & 40,000 & 9,221 & 30,779 & 35,088 \\ \hline 5 & 40,000 & 4,912 & 35,088 & 100 \\ \hline \end{tabular}