[iulee]

How do I compute for the long-term debt portion of notes payable? I have tried but I always get the wrong answer. The question is: A 30 month, 5%, $420,000 note payable is issued on Sep. 1, 2016. The corporation is required to pay $14,000 plus interest on the first day of each month starting on October 1, 2016. What is the current portion and the non-current portion of the notes payable? I got the correct answer for the current but not the non-current.

[paraclete]

Current is the amount which falls due within one year of balance date therefore on Sept 1 the current proportion would be $14,000 x 12 and the non current $420,000 - ($14000 x 12) Interest does not accumulate because it is not earned before a specific date.