This continues the Fitness Equipment Doctor, Inc., example from the Continuing Problem in Chapter 8. Fitness Equipment Doctor, Inc., purchased some of its long-term assets during 2018 using longterm debt. The following table summarizes the nature of this long-term debt. Assume the fiscal year ends on December 31.

Requirements

1. Calculate the interest expense that Fitness Equipment Doctor, Inc., should accrue as of December 31, 2018. Round your answer to the nearest dollar. Use 365 days for the note payable (ignore leap year).

2. Prepare the balance sheet presentation at December 31, 2018, for all long-term debt. Indicate the portion that should be classified as current and the portion that should be classified as long-term.

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Annual Interest Rate Item Payment Terms Date Amount Mar 18 Note payable 8% $35,800 Four equal annual payments of principal plus accrued interest are due on Mar 18 of each year. Mortgage payable 5% $135,000 Semiannual payments of $4,391 due on Aug 1 February 1 and August 1 of each year.