E4-10 Determining Financial Statement Effects of Interest on Two Notes L04-1 Note 1: On April 1 of the current year, Warren Corporation received a $48,000, 4 percent note from a customer in settlement of a $48,000 open account receivable. According to the terms, the principal of the note and interest are payable at the end of 12 months Warren's fiscal year ends on December 31 Note 2: On August 1 of the current year, to meet a cash shortage. Warren Corporation obtained a $48,000, 5 percent loan from a local bank. 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 direction of effects on the elements of the statement of financial position and the statement of earnings. (Reminder: Assets = Liabilities + Shareholders' equity, Revenues - Expenses Net earnings, and net earnings accounts are closed to retained earnings, a component of shareholders' equity) (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.) Statement of Financial Position Shareholders' Assets Llabilities Equity Statement of Earnings Revenues Expenses Net Earnings Date Note 1: April 1 (current year) (48,000) 1.440 1.440 (1.920) December 31 (current year) March 31 (next year) 480 48,000 48,000 Note 2: August 1 (current year) December 31 (current year) January 31 (next year) 1,000 (1.400) (48,000)