Question 16

Note 1. One April 1 of the current year warren corporation received $30,000, 10 percent note from a customer in settlement of a $30,000 open account receivable. According to the terms, the principal of the note 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 of six month.

Requirement

For the relevant transaction dates of each note, indicates the amounts and the direction of effects, on the elements of the balance sheet and income statement.

(Reminder. Assets=Liabilities +Stockholders Equity; Revenues-Expense=Net income. And Net income accounts are closed to Retained Earnings), a part of Stockholders equity. (Do not net the transaction effects. Indicate a decrease with a negative amount.)

Balance sheet Income statement

Date Assets Liabilities Stockholders Equity Revenues Expenses Net Income

April 1 (current year)

April 1 (current year)

December 31 (current year)

March 31 (next year)

March 31 (next year)

Note 2

August 1 ( current year)

December 31 (current year)

January 3 (next year)