Question 1:

Trevor Williams Company borrowed $10,000 from Mike Trout National Bank on May 1, 2019. Interest on the note, which accumulates at 6% annually, is paid when the loan principal is repaid. The loan remains outstanding on June 30 when both the Williams Company's and the Trout National Bank close their books to prepare financial statements. What is the effect on The Trout National Bank's pre-tax June 2019 income related to the loan?

A) Reduce June's pre-tax income by $50

B) Increase June's pre-tax income by $50

C) Increase June's pre-tax income by $100

D) Reduce June's pre-tax income by $100

The correct answer is B, but I'm confused. Could you explain why it's "Increase" not "Reduce" & why it's "$50" not "$100".

Question 2:

Trevor Williams Company borrowed $10,000 from Mike Trout National Bank on May 1, 2019. Interest on the note, which accumulates at 6% annually, is paid when the loan principal is repaid. The loan remains outstanding on June 30 when both the Williams Company's and the Trout National Bank close their books to prepare financial statements. Other than cash, The Williams Company's balance sheet shows which of these amounts related to the loan?

A) A liability = $10,050

B) A liability = $ 10,100

The correct answer is B. Could you explain why it's not A?

Thank you so much!