Determining Financial Statement Effects of Adjustments for Interest on Two Notes
Note 1: On April 1, 2017. Warren Corporation received a $30,000. 10 percent note from a customer in settlement of a $30,000 open account receivable. According to the terms, the principal of the note and interest are payable at the end of 12 months. The annual accounting period for Warren ends on December 31.2017.
Note 2: On August 1, 2017, to meet a cash shortage. Warren Corporation obtained a $30,000. 12 percent loan from a local hank. The principal of the note and interest expense are payable at the end of six months.
Required:
For the relevant transaction dates of each note, indicate the amounts and the direction of effects on the elements of the
Date | BALANCE SHEET | INCOME STATEMENT | ||||
Assets | Liabilities | Stockholders’ Equity | Revenues | Expenses | Net Income | |
Note1 April 1, 2017 |
||||||
December 31, 2017 | ||||||
March 31, 2018 | ||||||
Note 2 August 1, 2017 |
||||||
December 31, 2017 | ||||||
January 31, 2018 |
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