Proco had an account payable of $84,000 due to one of its suppliers. The amount was due to be paid on January 31. Hillside did not have enough cash on hand then to pay the amount due, so Proco's treasurer called the supplier and agreed to sign a note payable for the amount due. The note was dated February 1, had an interest rate of 7% per annum, and was payable with interest on May 31.

Q1 What effects did the February 1 change from account payable to a note payable have on the financial statements?

Q2 What effects did the March 31 accrual of interest expense for February and March have on the financial statements?

Q3 What effects did the May 31 payment of the note and all of the interest due to the supplier have on the financial statements?

The options for all three Questions Below

a. Increase in assets and liabilities

b. Decrease in assets, decrease in liabilities

c. Decrease in assets, decrease in liabilities, decrease in stockholders equity

d. Decrease in assets, increase in liabilities, increase in stockholders equity