Canton Cave Company provided the following schedule of liabilities on December 31, 2019: Accounts payable 6,500,000 Notes payable-bank 8,000,000 Interest payable 150,000 Mortgage payable-10% 2,000,000 Bonds payable 4,000,000 *Bank notes payable include two separate notes payable to First Bank A ₱ 3, 000,000, 10% note issued March 1, 2018, payable on demand. Interest is payable every six months. A one-year, ₱5,000,000, 11% note issued January 2, 2019. On December 31, 2019, Canton Cave negotiated a written agreement with First Bank to replace the note with a 2-year, ₱5,000,000, 10% note issued January 2, 2020. *The 10% mortgage note was issued October 1, 2016 with a term of 10 years. Terms of the note give the holder the right to demand immediate payment if the entity fails to make a monthly interest within 10 days of the date the payment is due. On December 31, 2019, Canton Cave is three months behind in paying its required initial payment. The bonds payable are 10-year, 8% bonds, issued June 30, 2002.Interest is payable semiannually on June 30 and December 31.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Problem 4:
Canton Cave Company provided the following schedule of liabilities on December 31, 2019:
Accounts payable 6,500,000
Notes payable-bank 8,000,000
Interest payable 150,000
Mortgage payable-10% 2,000,000
Bonds payable 4,000,000
*Bank notes payable include two separate notes payable to First Bank
A ₱ 3, 000,000, 10% note issued March 1, 2018, payable on demand. Interest is payable every six
months.
A one-year, ₱5,000,000, 11% note issued January 2, 2019. On December 31, 2019, Canton Cave
negotiated a written agreement with First Bank to replace the note with a 2-year, ₱5,000,000, 10%
note issued January 2, 2020.
*The 10% mortgage note was issued October 1, 2016 with a term of 10 years.
Terms of the note give the holder the right to demand immediate payment if the entity fails to make a
monthly interest within 10 days of the date the payment is due.
On December 31, 2019, Canton Cave is three months behind in paying its required initial payment.
The bonds payable are 10-year, 8% bonds, issued June 30, 2002.Interest is payable semiannually on June 30
and December 31.
Required: Compute the total current liabilities on December 31 2019.
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