Determine current portion of long term note payable on january 1, irving company purchased equipment of 280,000 with a long term note payable. the debt is payable in annual installments of 56,000 due in december 31 of each year. at the date of purchase, how will irving company report the note payable?

The current portion of any long term liability is the amount which is due in the current year of the balance sheet. So in this case the current portion of the long term note payable is $56,000 as it is the amount which is due within the current balance sheet year.

                                                   Debit                                         Credit

Equipment                                   280,000

Long term Note payable                                                                 280,000

Long term Note payable               56,000

Current portion of long term note                                                     56,000

First we will debit equipment because an asset is increasing and credit long term note payable because a liability is increasing.

Then we will debit long term note payable as a portion of the long term note is a current liability, and we will thus credit current portion of a long term note.

Explanation: