QUESTION 12

1. Hillwood Clinic has borrowed $90,000 from the bank with the following terms: $20,000 of this amount to be paid in Year 1, $30,000 to be paid in Year 2, and $40,000 to be paid in Year 3. Time moves on, and Hillwood meets the terms of the note in Year 1. Therefore at the beginning of Year 2 the remaining portion of the loan is now classified as follows:

   		$70,000 long-term note payable
   		$30,000 short-term note payable plus $40,000 long-term note payable
   		$20,000 short-term note payable plus $50,000 long-term note payable
   		None of the above