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Unformatted text preview: the balance sheet date, the amount of the payment is classified as a current liability in the balance sheet. The portion of the debt to be paid after one year is classified as a long-term liability. Notes payable almost always require interest payments. The interest owed for the period the debt has been outstanding that has not been paid must be accrued. Accruing interest creates an expense and a liability. A different liability account is used for interest payable so it can be separately identified. The entries for a six-month, $12,000 note, signed November 1 by The Quality Control Corp., with interest at 10% are:...
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- Spring '08