On July 1,2017,Falcon Company received a $20,000 promissory note for services from Jordyn Company.The annual interest rate is 5%.Principal and interest are paid in cash at the maturity date of June 30,2018.
The effect on Falcon's financial statements on July 1,2017,is which of the following?

Question

On July 1,2017,Falcon Company received a $20,000 promissory note for services from Jordyn Company.The annual interest rate is 5%.Principal and interest are paid in cash at the maturity date of June 30,2018. ​
The effect on Falcon's financial statements on July 1,2017,is which of the following?

Quizplus · Accepted Answer

On July 1, 2017, Falcon Company receives a $20,000 promissory note from Jordyn Company for services rendered. This represents an increase in Falcon's assets by $20,000, as it has the right to receive payment from Jordyn. There is no effect on stockholders' equity at this point because no revenue has been recognized.

On July 1,2017,Falcon Company Received a $20,000 Promissory Note for Services