At the beginning of the year, your company borrows $15,900 by signing a three-year promissory note that states an annual interest rate of 7% plus principal repayments of $5,300 each year. Interest is paid at the end of the second and fourth quarters, whereas principal payments are due at the end of each year. How does this new promissory note affect the current and non-current liability amounts reported on the classified balance sheet prepared at the end of the first quarter

Increase current liabilities by $278.25; increase non-current liabilities by $15,900.

Explanation:

Quarterly interest expense = Amount borrowed * (Annual interest rate / 4) = $15,900 * (7% / 4) = $15,900 * 1.75% = $278.25

Since, interest is paid at the end of the second and fourth quarters and principal payments are due at the end of each year, that means both the interest expense and the principal are still liabilities at the end of the first quarters.

It should be noted that a three-year promissory note of $15,900 is a non-current liability since its tenure is more than one year, while the quarterly interest expense of $278.25 for the first quarter is a current liability since it is dues within a year.

Therefore, the effect of this new promissory note on the current and non-current liability amounts reported on the classified balance sheet prepared at the end of the first quarter will be as follows:

Increase current liabilities by $278.25; increase non-current liabilities by $15,900.

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

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