On August 1, Year 1 Hernandez Company loaned $48,000 cash to Acosta Company. The one-year note...

On August 1, Year 1 Hernandez Company loaned $48,000 cash to Acosta Company. The one-year note carried a 5% rate of interest. Which of the following shows how the accrual of interest revenue in Year 2 will effect Hernandez’s financial statements?

	Balance sheet					Income Statement					Statement of Cash Flows
	Assets	=	Liab.	+	Equity	Rev.	−	Exp.	=	Net Inc.	Statement of Cash Flows
A.	1,400	=	NA	+	1,400	1,400	−	NA	=	1,400	NA
B.	1,400	=	NA	+	1,400	1,400	−	NA	=	1,400	1,400 OA
C.	1,000	=	NA	+	1,000	1,000	−	NA	=	1,000	NA
D.	1,000	=	NA	+	1,000	1,000	−	NA	=	1,000	2,400 OA

Solutions

Expert Solution

ekkarill92 answered 6 months ago

Next > < Previous

Related Solutions

Franklin Company issued a $40,000 note to the Mercantile Bank on August 1, Year 1. The...

Franklin Company issued a $40,000 note to the Mercantile Bank on August 1, Year 1. The note carried a one-year term and a 12% rate of interest. How will the adjustment, dated December 31, Year 1, to record accrued interest expense impact the elements of the financial statements? Multiple Choice Decrease assets and decrease retained earnings by $2,000 Increase liabilities and decrease equity by $2,000 Increase liabilities and decrease equity by $1,600 Decrease equity and increase liabilities by $4,800 The...

On August 1, 2019, ABC Co. borrowed $10,000 on a one-year Note Payable with an interest...

On August 1, 2019, ABC Co. borrowed $10,000 on a one-year Note Payable with an interest rate of 12% per year. a) What is the adjusting journal entry on November 30, 2019 to record the relevant expense for the month of November? Debit Credit Amount b) When the December 31, 2019 adjusting journal entry is made, a balance sheet account is impacted. Select the name of this account. Also, on January 1, 2020, after making the December 31 adjusting...

1. Flint Corporation issued a 4-year, $48,000, zero-interest-bearing note to Garcia Company on January 1, 2017,...

1. Flint Corporation issued a 4-year, $48,000, zero-interest-bearing note to Garcia Company on January 1, 2017, and received cash of $48,000. In addition, Flint agreed to sell merchandise to Garcia at an amount less than regular selling price over the 4-year period. The market rate of interest for similar notes is 12%. Prepare Flint Corporation’s January 1 journal entry. 2. At December 31, 2017, Wildhorse Corporation has the following account balances: Bonds payable, due January 1, 2026 $2,400,000 Discount on...

20182018 Sep.Sep.???1 Loaned $ 15 comma 000$15,000 cash to Bill McCabeBill McCabe on a? one-year, 1212?%...

20182018 Sep.Sep.???1 Loaned $ 15 comma 000$15,000 cash to Bill McCabeBill McCabe on a? one-year, 1212?% note. Nov.Nov.???6 Sold goods to Fairway MastersFairway Masters?, receiving a? 90-day, 66?% note for $ 16 comma 000$16,000. Ignore Cost of Goods Sold. 3030 Made a single entry to accrue interest revenue on both notes. ?? Collected the maturity value of the Fairway MastersFairway Masters note. 20192019 Sep.Sep.???1 Collected the maturity value of the McCabeMcCabe note. ??: Collected the maturity value of the Fairway...

National Bank loaned the Lyon Company $10 million, at an interest rate of 8%. The note...

National Bank loaned the Lyon Company $10 million, at an interest rate of 8%. The note was signed January 1, 2008, and was due December 31, 2022. Annual interest was last paid on December 31, 2016. At January 1, 2018, National believes it will not collect accrued interest, that it will only receive $500,000 of interest each year, and that it will only receive $8 million of principal at the end of the life of the note. Calculate the amount...

20. The Company has a $48,000 pure discount bond that comes due in one year. The...

20. The Company has a $48,000 pure discount bond that comes due in one year. The risk-free rate of return is 3 percent. The firm's assets are expected to be worth either $45,000 or $55,000 in one year. Currently, these assets are worth $50,000. What is the current value of the firm's debt? $43,724.75 $47,681.49 $46,277.13 $45,582.52 $44,106.59

On August 1, a company paid the $2,400 premium on a one-year insurance policy with benefits...

On August 1, a company paid the $2,400 premium on a one-year insurance policy with benefits beginning on that date. What will the balance be in the Prepaid Insurance account on the Balance Sheet for the current year ended December 31? Select one: A. $1,000. B. $2,400. C. $1,400. D. $400. E. $1,200.

Rainey Enterprises loaned $20,000 to Small Co. on June 1, 2018, for one year at 6...

Rainey Enterprises loaned $20,000 to Small Co. on June 1, 2018, for one year at 6 percent interest. Required Show the effects of the following transactions in a horizontal statements. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA). The letters NA indicate that an element is not affected by the event. (Do not round intermediate calculations. Enter any decreases to account balances and cash outflows...

Rainey Enterprises loaned $40,000 to Small Co. on June 1, 2018, for one year at 7...

Rainey Enterprises loaned $40,000 to Small Co. on June 1, 2018, for one year at 7 percent interest. Show the effects of the following transactions in a horizontal statements. In the Cash Flow column, indicate wheter the item is an (OA), (IA), or a (FA). 1. The Loan to Small Co. 2. The adjusting entry at December 31, 2018 3. The adjusting entry and collection of the note on June 1, 2019 How would the Horizontal Statements Model look like?

Jan. 3 Loaned $21,600 cash to Trina Gelhaus, receiving a 90-day, 7% note. Feb. 10 Sold...

Jan. 3 Loaned $21,600 cash to Trina Gelhaus, receiving a 90-day, 7% note. Feb. 10 Sold merchandise on account to Bradford & Co., $26,400. The cost of the goods sold was $15,840. 13 Sold merchandise on account to Dry Creek Co., $63,600. The cost of goods sold was $57,240. Mar. 12 Accepted a 60-day, 8% note for $26,400 from Bradford & Co. on account. 14 Accepted a 60-day, 9% note for $63,600 from Dry Creek Co. on account. Apr. 3...

Subjects