Callahan Corporation recorded an adjusting entry using T-accounts as follows:

Which of the following reflects how this adjustment affects the company's financial statements?

A)Option A
B)Option B
C)Option C
D)Option D

Question

Callahan Corporation recorded an adjusting entry using T-accounts as follows:

Which of the following reflects how this adjustment affects the company's financial statements?

A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

This adjusting entry records the accrued interest revenue as of the end of the accounting period.It increases revenue (interest revenue),which increases net income and stockholders' equity (retained earnings).It also increases assets (interest receivable).The adjusting entry has no effect on cash flows.

Callahan Corporation Recorded an Adjusting Entry Using T-Accounts as Follows