On august 1, year 1 Gomez Company borrowed $48,000 cash. The one-year note carried a 5% rate of interest. Which of the following shows how the accrual of interest expense in Year 2 will effect Gomez?s financial statements?

Transcribed Image Text:

Assets NA Assets ΝΑ Assets ΝΑ Assets NA Balance Sheet Liab. 1,400 . Balance Sheet Liab 1,400 Balance Sheet Liab. 1,000 Balance Sheet Liab. 1,000 W Equity (1,400) Equity (1,400) Equity (1,000) Equity (1,000) Rev. ΝΑ Rev. ΝΑ Rev. NA Rev. NA Income Statement Exp. - 1,400 . Income Statement Exp. 1,400 Net Inc. (1,400) Income Statement . Net Inc. (1,400) Exp. N Net Inc. 1,000 (1,000) Income Statement Exp. 1,000 . Net Inc. (1,000) Statement of Cash Flows (1,400) OA Statement of Cash Flows ΝΑ Statement of Cash Flows (1,000) OA Statement of Cash Flows NA Assets NA Assets ΝΑ Assets ΝΑ Assets NA Balance Sheet Liab. 1,400 . Balance Sheet Liab 1,400 Balance Sheet Liab. 1,000 Balance Sheet Liab. 1,000 W Equity (1,400) Equity (1,400) Equity (1,000) Equity (1,000) Rev. ΝΑ Rev. ΝΑ Rev. NA Rev. NA Income Statement Exp. - 1,400 . Income Statement Exp. 1,400 Net Inc. (1,400) Income Statement . Net Inc. (1,400) Exp. N Net Inc. 1,000 (1,000) Income Statement Exp. 1,000 . Net Inc. (1,000) Statement of Cash Flows (1,400) OA Statement of Cash Flows ΝΑ Statement of Cash Flows (1,000) OA Statement of Cash Flows NA

Answer rating: 100% (QA)

Interest accrued in Year 2 480005712 ... View the full answer