Answered: On July 1, 2021, HAZELNUT Company…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 12EA: Scrimiger Paints wants to upgrade its machinery and on September 20 takes out a loan from the bank...

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10. On July 1, 2021, HAZELNUT Company acquired machinery worth ₱2,500,000 from PINE NUTS Corporation. Terms of the contract calls for a downpayment of ₱500,000 and signing a 2-year 10% note payable for the balance. Interest is payable quarterly. The existing loan agreement does not carry a provision to refinance. During September, HAZELNUT was experiencing financial difficulty and was unable to pay the periodic interest. What total amount of current liability should HAZELNUT report in its December 31, 2021 statement of financial position assuming PINE NUT agreed at report date not to demand payment as a consequence of the breach?

a. ₱ 100,000

b. ₱ 50,000

c. ₱ 0

d. ₱ 2,100,000

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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