On January 1, Year 1, Mahoney Company borrowed $324,000 cash from Sun Bank by issuing a 5-year, 8% term note. The principal and interest are repaid by making annual payments beginning on December 31, Year 1. The annual payment on the loan equals $81,150.

Which of the following shows the effects on the financial statement of the cash payment on December 31, Year 1?

	Balance Sheet					Income Statement					Statement of Cash Flows
	Assets	=	Liabilities	+	Stockholders Equity	Revenue		Expense	=	Net Income
A.						n/a		+			FA/OA
B.					n/a	n/a		n/a		n/a	FA
C.			+			n/a		+			FA/OA
D.					n/a	n/a		+			OA

Multiple Choice

• Option C

• Option A

• Option D

• Option B