On march 1, 2018, Lewis services issued a 5% long term notes payable for $25,000. It is payable over a 5 year term in $5,000 principal installments on March 1 of each year, Beginning March 1, 2019. This transaction has the following effects :
i. Assets increases in the form of cash because when note is issued, cash is received.
ii. Long term liabilities increase in the form of long term note payable by $25,000 at the time of issue.
It is a long term liability. In the balance sheet at Dec 31, 2018, $5,000 note will be shown as current liabilities and remaining $20,000 note will be shown as long term liability.
Account Title and Explanation
|Long term notes payable||25,000|
Correct option is (C)
kindly give a positive rating if you are satisfied with the solution. do comment if you have any query, Thanks..