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 December 31, Year 1 recognition of accrued interest will affect Hernandez’s financial statements?
Balance sheet Income Statement Statement of
Cash Flows
Assets = Liab. + Equity Rev. − Exp. = Net Inc.
A. 1,400 = NA + 1,400 1,400 − NA = 1,400 1,400 OA
B. 1,400 = NA + 1,400 1,400 − NA = 1,400 NA
C. 1,000 = NA + 1,000 1,000 − NA = 1,000 1,000 OA
D. 1,000 = NA + 1,000 1,000 − NA = 1,000 NA
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On August 1, Year 1 Hernandez Company loaned $48,000 cash to Acosta Company. The one-year note carri...
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