Description
Notes Payable and Interest
On July 1, 2017, Kamer's Trinkets borrowed $38,000 from the bank. Kamer signed a ten-month, 8% promissory note for the entire amount. Kamer's uses a calendar year-end.
Required:
1. Identify and analyze the effect of the issuance of the promissory note.
Activity | |
Accounts | |
Statement(s) |
Feedback
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
Balance Sheet | Income Statement | |||||||||||||
Stockholders' | Net | |||||||||||||
Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | |||||
Feedback
Correct
2. Identify and analyze the effect of any adjustments needed at year-end.
Activity | |
Accounts | |
Statement(s) |
Feedback
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Use months in calculation. Do not round intermediate calculations. If required, round your final answer to the nearest dollar.
Balance Sheet | Income Statement | |||||||||||||
Stockholders' | Net | |||||||||||||
Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | |||||
Feedback
3. Identify and analyze the effect of the payment of principal and interest.
Activity | |
Accounts | |
Statement(s) |
Feedback
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Use months in calculation. Do not round intermediate calculations. If required, round your final answer to the nearest dollar.
Balance Sheet | Income Statement | |||||||||||||
Stockholders' | Net | |||||||||||||
Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | |||||
Explanation & Answer
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