Question
On September 1, Year 1, Laredo Company purchased equipment making a down payment of $15,500 cash and signing a one-year note payable on the $22,500
On September 1, Year 1, Laredo Company purchased equipment making a down payment of $15,500 cash and signing a one-year note payable on the $22,500 balance. The note carried an interest rate of 6%, and all interest was to be paid on the maturity date. Which of the following correctly shows the combined effect of the purchase as well as the accrual of interest on December 31, Year 1?
| Net Income | Cash Flows | |||
|---|---|---|---|---|
| Operating | Investing | Financing | ||
| A. | (450) | NA | (15,500) | NA |
| B. | NA | (450) | NA | 22,500 |
| C. | (450) | NA | (15,500) | 22,500 |
| D. | (450) | (450) | (15,500) | NA |
Multiple Choice
Option A
Option B
Option C
Option D
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Advanced Financial Accounting
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
6th edition
013703038X, 978-0137030385
