On August 31, Year 1, Car Tunes, Inc., borrowed $60,000 at 12% with interest and principal due in ten months. Show the effect of this note on Car Tunes' financial statements as of and for the year ended December 31, Year 1. Income Statement Statement of Cash Flows Balance SheetA.Issuance of Notes Payable $60,000B.Interest Payable $2,400 and Notes Payable $60,000C.Interest Payable $(2,400) and Notes Payable $(60,000)D.Interest Payable $2,880E.Interest Expense $2,880F.Interest Expense $2,400G.Interest Expense $2,880 and Notes Payable $60,000H.Issuance of Notes Payable $(60,000)I.Interest Payable $(2,880) and Notes Payable $(60,000)

Financial Statement - Financial Statement includes Income Statement, Balance Sheet and Statement of…

Answered: On August 31, Year 1, Car Tunes, Inc.,…

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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On August 31, Year 1, Car Tunes, Inc., borrowed $60,000 at 12% with interest and principal due in ten months. Show the effect of this note on Car Tunes' financial statements as of and for the year ended December 31, Year 1.

	Income Statement
	Statement of Cash Flows
	Balance Sheet

A.	Issuance of Notes Payable $60,000
B.	Interest Payable $2,400 and Notes Payable $60,000
C.	Interest Payable $(2,400) and Notes Payable $(60,000)
D.	Interest Payable $2,880
E.	Interest Expense $2,880
F.	Interest Expense $2,400
G.	Interest Expense $2,880 and Notes Payable $60,000
H.	Issuance of Notes Payable $(60,000)
I.	Interest Payable $(2,880) and Notes Payable $(60,000)