Purdum Farms Borrowed $10 Million by Signing a Five Year

Multiple Choice

Purdum Farms borrowed $10 million by signing a five year note on January 1,2010 and repayments of the principal are payable annually in $2 million installments.Purdum Farms makes the first payment December 31,2010 and then prepares its balance sheet.What amount will be reported as current and long-term liabilities respectively in connection with the note at December 31,2010?

A) $2 million in current liabilities and $8 million in long-term liabilities.
B) $2 million in current liabilities and $6 million in long-term liabilities.
C) Zero in current liabilities and $8 million in long-term liabilities.
D) Zero in current liabilities and $10 million in long-term liabilities.