QUESTION 46 On January 1, 2020, Smith Company signed a ten-year Note for the acquisition of equipment. Annual note payments of $22,000, based on an interest rate of 10% are to be made every December 31, beginning with December 2020. The present value of the minimum lease payments is $135,180. Required: Indicate the effect of the following on the company's accounting equation. Indicate each account title affected and the dollar change and whether it increased or decreased. To record the second note payment on December 31, 2021. O Increase interest expense $13,518, thereby decreasing net income, retained earnings, and cash for $13,518. O Increase interest expense $22,000, thereby decreasing net income, retained earnings, and cash for $22,000. O Increase interest expense $13,500, thereby decreasing net income and retained earnings for $13,500. Decrease cash $22,000 and note payable $8,500. O Increase interest expense $12,669.80, thereby decreasing net income and retained earnings for $12,669.80 Decrease cash $22,000 and note payable $9,330.20.

QUESTION 46 On January 1, 2020, Smith Company signed a ten-year Note for the acquisition of equipment. Annual note payments of $22,000, based on an interest rate of 10% are to be made every December 31, beginning with December 2020. The present value of the minimum lease payments is $135,180. Required: Indicate the effect of the following on the company's accounting equation. Indicate each account title affected and the dollar change and whether it increased or decreased. To record the second note payment on December 31, 2021. O Increase interest expense $13,518, thereby decreasing net income, retained earnings, and cash for $13,518. O Increase interest expense $22,000, thereby decreasing net income, retained earnings, and cash for $22,000. O Increase interest expense $13,500, thereby decreasing net income and retained earnings for $13,500. Decrease cash $22,000 and note payable $8,500. O Increase interest expense $12,669.80, thereby decreasing net income and retained earnings for $12,669.80 Decrease cash $22,000 and note payable $9,330.20.

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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