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On April 1, 2020, Dsseldorf Ltd. borrowed $500,000 for 20 years. Principal repayments of $25,000 and interest at 7% are due annually on March 31.

On April 1, 2020, Dsseldorf Ltd. borrowed $500,000 for 20 years. Principal repayments of $25,000 and interest at 7% are due annually on March 31.

Required

a. Prepare all of the journal entries required in relation to the loan for the year ended June 30, 2020.

b. What is the impact on the current ratio of reclassifying the current portion of the long-term loan?

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