Isurance expense E4-14 Determining Financial Statement Effects of Adjustments for Interest on Two Notes LO4-1 Note 1: On April 1 of the current year, Warren Corporation received a $30,000, 10 percent note from a cus- tomer in settlement of a $30,000 open account receivable. According to the terms, the principal of the note and interest are payable at the end of 12 months. The annual accounting period for Warren ends on December 31 Note 2: On August 1 of the current year, to meet a cash shortage, Warren Corporation obtained a $30,000, 12 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 as shown in the following table, indicate the amounts and the direction of effects on the elements of the balance sheet and income statement. Use + for increase, for decrease, and NE for no effect. (Reminder: Assets Liabilities +Stockholders' Equity; Revenues-Expenses Net Income; and Net Income accounts are closed to Retained Earnings, a part of Stockholders' Equity.) INCOME STATEMENT BALANCE SHEET Stockholders Equity Net Assets Liabilities Revenues Expenses Income Date Note 1 April 1 (current year) December 31 (current year) March 31 (next year) Note 2 August 1 (current year) December 31 (current year) January 31 (next year)