FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:A business issued a 90-day, 9% note for $25,000 to a creditor on account. Illustrate the effects on the accounts and financial statements of recording (a) the issuance of the
note and (b) the payment of the note at maturity, including interest.
If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows
as negative amounts.
a. Illustrate the effects on the accounts and financial statements of recording the issuance of the note.
Statement of Cash
Flows
No effect
Statement of Cash Flows
Statement of Cash
Assets
No effect
Flows
Assets
Cash
= Accounts payable
✓
Balance Sheet
Liabilities
Liabilities
Balance Sheet
Notes payable
✓ +Notes payable
b. Illustrate the effects on the accounts and financial statements of recording the payment of the note at maturity, including interest. Assume a 360-day year. If required,
round interest expense to the nearest whole number.
+
Stockholders' Equity
✓
Retained earnings
+
+
Stockholders' Equity
No effect
No effect
Income
Statement
Income Statement
Income
Statement
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