Academy Grill Supply
On October 1, Year 1, the company received a $50,000 promissory note from a customer. The annual interest rate is 6%. Principal and interest will be collected in cash at the maturity date of September 30, 2013.
-Refer to the figure Academy Grill Supply.What is the effect on the company's financial statements on September 30,Year 2?

Question

Quizplus · Accepted Answer

On September 30, Year 2, the company will have collected the principal amount and interest on the promissory note, resulting in an increase in the company's cash (asset) account and an increase in shareholders' equity from the interest revenue earned. There is no effect on liabilities. Therefore, option A is correct.

Academy Grill Supply On October 1, Year 1, the Company Received a $50,000