On November 1,2012, EZ Products borrowed $48,000 on a 5%, 10-year note with annu

Question

On November 1,2012, EZ Products borrowed $48,000 on a 5%, 10-year note with annual installment payments of $4,800 plus interest due on November 1 of each succeeding year. On November 1, the principal amount was initially recorded as Long-term notes payable, and then a second entry was made to reclassify the current portion. Which of the following is the proper reclassification entry? Long-term notes payable 4,800 Current portion of long-term notes payable 4,800 Current portion of long-term notes payable 4800 Accounts payable 4800 Current portion of long-term notes payable 4800 long-term notes payable 4800 long-term notes payable 4800 Accounts payable 4800

Explanation / Answer

The proper reclassification entry will be $ $ Long Term Notes Payable A/c DR 4800 To Accounts Payable (Short term portion of notes payable) A/c 4800

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