On September 1s* the company borrows $1,000,000 from a local bank for nine months. A note is signed with principal and 3% interest to be paid when the note matures next year. A note payable was recognized on September 1st and no other entries regarding this transaction were made until December 31st. In the adjusting entry recorded on 11. $ December 31st determine the amount of interest expense that should be reported. 12. What effect would failure to record the adjusting entry for this note payable have on the financial statement items? A. would cause it to be overstated B. would cause it to be understated C. would have no effect Assets Liabilities Stockholders' Equity Revenue Expenses Net income
On September 1s* the company borrows $1,000,000 from a local bank for nine months. A note is signed with principal and 3% interest to be paid when the note matures next year. A note payable was recognized on September 1st and no other entries regarding this transaction were made until December 31st. In the adjusting entry recorded on 11. $ December 31st determine the amount of interest expense that should be reported. 12. What effect would failure to record the adjusting entry for this note payable have on the financial statement items? A. would cause it to be overstated B. would cause it to be understated C. would have no effect Assets Liabilities Stockholders' Equity Revenue Expenses Net income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Transcribed Image Text:Use the following to answer questions 11 – 12
On September 1s' the company borrows $1,000,000 from
a local bank for nine months. A note is signed with
principal and 3% interest to be paid when the note
matures next year. A note payable was recognized on
September 1st and no other entries regarding this
transaction were made until December 31st.
In the adjusting entry recorded on
11. $
December 31st determine the amount of interest expense
that should be reported.
12. What effect would failure to record the adjusting entry
for this note payable have on the financial statement
items?
A. would cause it to be overstated
B. would cause it to be understated
C. would have no effect
Assets Liabilities Stockholders' Equity|Revenue Expenses Net income
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