Notes PayableA business issued a 90-day, 9% note for $52,000 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.Balance SheetStatement ofStockholders'IncomeAssetsLiabilities+%3DCash FlowsEquityStatementNo effectAccounts payable v+Notes payable v+No effect v52,000Statement of Cash FlowsIncome StatementNo effect vNo effect vb. 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.Balance SheetStatement ofIncomeAssetsLiabilities+Stockholders' EquityCash FlowsStatementCash VNotes payableRetained earnings+Statement of Cash FlowsIncome StatementOperatingInterest expense

Interest expense = 52000 * 9% * 90 / 360 = 4680 * 90 /360 = $ 1170

Notes Payable A business issued a 90-day, 9% note for $52,000 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. Balance Sheet Statement of Stockholders' Income Assets Liabilities Cash Flows Equity Statement No effect v = Accounts payable + Notes payable v No effect v 52,000 v Statement of Cash Flows Income Statement No effect v No effect v 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. Balance Sheet Statement of Income Assets Liabilities Stockholders' Equity Cash Flows Statement Cash v Notes payable v + Retained earnings v Statement of Cash Flows Income Statement Operating v Interest expense V

Notes Payable A business issued a 90-day, 9% note for $52,000 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. Balance Sheet Statement of Stockholders' Income Assets Liabilities Cash Flows Equity Statement No effect v = Accounts payable + Notes payable v No effect v 52,000 v Statement of Cash Flows Income Statement No effect v No effect v 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. Balance Sheet Statement of Income Assets Liabilities Stockholders' Equity Cash Flows Statement Cash v Notes payable v + Retained earnings v Statement of Cash Flows Income Statement Operating v Interest expense V

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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