Current Portion Of A Note Payable
Definition: The current portion of a note payable is the amount of principal due within the next 12 months (or one operating cycle). When a company holds a lon…
ModerateDifficult
The current portion of a note payable is the amount of principal due within the next 12 months (or one operating cycle). When a company holds a long-term note payable, the portion maturing in the current period is reclassified from long-term liabilities to current liabilities on the balance sheet. This reclassification occurs at each balance sheet date and affects key liquidity ratios like the current ratio.
Amortization Calculator
A retail company using a Periodic/FIFO system financed warehouse equipment with a $100,000.00 note payable at 6% over 5 years. This business updates inventory counts only at the end of each period.
| Year | Beginning Balance | Payment | Interest | Principal | Ending Balance | Current Portion | Long-Term Portion |
|---|---|---|---|---|---|---|---|
| 1 | $100,000.00 | $23,739.64 | $6,000.00 | $17,739.64 | $82,260.36 | $18,804.02 | $63,456.34 |
| 2 | $82,260.36 | $23,739.64 | $4,935.62 | $18,804.02 | $63,456.34 | $19,932.26 | $43,524.08 |
| 3 | $63,456.34 | $23,739.64 | $3,807.38 | $19,932.26 | $43,524.08 | $21,128.20 | $22,395.89 |
| 4 | $43,524.08 | $23,739.64 | $2,611.44 | $21,128.20 | $22,395.89 | $22,395.89 | $0.00 |
| 5 | $22,395.89 | $23,739.64 | $1,343.75 | $22,395.89 | $0.00 | $0.00 | $0.00 |
After Year 1: Current Portion = $18,804.02, Long-Term Portion = $63,456.34
DurationLong-Term
Related Subjects
Foundation
- Notes Payable (Long-Term)The parent obligation — the current portion is carved out from this
- Long-Term LiabilitiesBroader category containing the non-current remainder
Related
- Notes Payable (Short-Term)A note that's entirely short-term, unlike a carved-out current portion
- Current Portion of Long-Term Debt (CPLTD)General concept — current portion of a note is one specific type of CPLTD
- AmortizationThe process of reducing the note balance over time via scheduled payments
- Current LiabilitiesThe classification bucket for the current portion
- Mortgage PayableAnother long-term obligation with a current portion
- Current Portion of Lease LiabilityAnalogous concept for lease obligations
Reported On
- Balance SheetBoth current and non-current portions appear on the balance sheet
Produces
- Interest ExpenseNotes payable generate interest expense each period
External Links
- Promissory note — Wikipedia