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Question
GIVEN: A note payable for $46,200 was issued on June 30, 2018 and is due in two years on June 30, 2020. Interest in the amount of 10% is paid annually on June 30th.
TASK: Prepare the balance sheet as of December 31, 2018. Calculate the current ratio.
For this question, on December 31, 2018 I have interest expense (accrued for 6 months) at $2310 ($46,200*(.10)*(6/12)). I hope this is correct.
Also, since this is a two year note, when calculating current ratio at 12/31/2018, do you have to take into consideration the portion that is current and the portion that is long term? Is the amount to include in the current ratio $46200*(18/24) = $34,650? Because at 12/31/2018, only 18 out of 24 months of the loan will be due within 1 year.
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