Final answer:
The correct option is c. $2,400,000.
The $3 million note owed by Parton that was due on February 28 would be entirely paid off by a combination of a new $2,400,000 5-year note and additional cash. Therefore, there is no portion of the original $3 million note classified as long-term in the December 31 financial statements; the correct answer is $0.
Step-by-step explanation:
To determine the classification of debt in the financial statements for Parton, we need to identify the portions that are due within one year (short-term) and those due beyond one year (long-term). Parton owed $3 million that was due on February 28. They took out a new 5-year note on February 25 for $2,400,000 and used these proceeds along with additional cash to pay off the original note. Since the new note is a 5-year note, this implies that the entire balance of the new loan is considered long-term debt.
Therefore, none of the original $3 million note would be classified as long-term on the December 31 financial statements because it would have been paid off by then. The correct answer is thus $0. It's important to note that only the remaining balance of any debt that is due after one year from the date of the financial statements is considered long-term.