On July 1, 20A, Goode Company borrowed $10,000. The company signed a note payable with interest at 12 percent per year. The note and interest are due on December 31, 20A. On December 31, 20A, Goode paid $10,600 to settle the debt in full. Transaction analysis of the $10,600 cash payment on December 31, 20A, should reflect the following (before any adjusting entries are made):
A. decrease assets, $10,600; decrease liabilities, $10,600.
B. decrease assets, $10,000; decrease stockholders' equity, $600; and decrease liabilities, $10,600.
C. decrease stockholders' equity, $10,000; decrease liabilities, $600; and decrease assets, $10,600.
D. decrease liabilities, $10,000; decrease stockholders' equity, $600; and decrease assets, $10,600.
Ans: D. decrease liabilities, $10,000; decrease stockholders' equity, $600; and decrease assets, $10,600.
You might also like to view...
Under the FIFO accounting method, it is assumed that old stock is sold last and the new stock remains on the shelves
Indicate whether the statement is true or false
The ________ is used by financial managers as a structure for dissecting a firm's financial statements to assess its financial condition
A) statement of cash flows B) DuPont system of analysis C) break-even analysis D) technical analysis