Notes Payable Video Lessons

Video Thumbnail

Concept

Problem: On July 1, 2006, Gerdin Company borrowed $100,000. The company signed a note payable with interest at 6 percent per year. The note and interest are due on December 31, 2006. On December 31, 2006, Goode paid $103,000 to settle the debt in full. Gerdin has not prepared any financial statements since borrowing the money. Transaction analysis of the $103,000 cash payment on December 31, 2006, should reflect the following: a. decrease assets, $103,000; decrease liabilities, $103,000 b. decrease assets, $100,000; decrease stockholders' equity, $3,000; and decrease liabilities, $103,000 c. decrease stockholders' equity, $100,000; decrease liabilities, $3,000; and decrease assets, $103,000 d. decrease liabilities, $100,000; decrease stockholders' equity, $3,000; and decrease assets, $103,000 e. None of the above is correct

FREE Expert Solution
Problem Details

On July 1, 2006, Gerdin Company borrowed $100,000. The company signed a note payable with interest at 6 percent per year. The note and interest are due on December 31, 2006. On December 31, 2006, Goode paid $103,000 to settle the debt in full. Gerdin has not prepared any financial statements since borrowing the money. Transaction analysis of the $103,000 cash payment on December 31, 2006, should reflect the following:

a. decrease assets, $103,000; decrease liabilities, $103,000

b. decrease assets, $100,000; decrease stockholders' equity, $3,000; and decrease liabilities, $103,000

c. decrease stockholders' equity, $100,000; decrease liabilities, $3,000; and decrease assets, $103,000

d. decrease liabilities, $100,000; decrease stockholders' equity, $3,000; and decrease assets, $103,000

e. None of the above is correct

Frequently Asked Questions

What scientific concept do you need to know in order to solve this problem?

Our tutors have indicated that to solve this problem you will need to apply the Notes Payable concept. You can view video lessons to learn Notes Payable. Or if you need more Notes Payable practice, you can also practice Notes Payable practice problems.

What is the difficulty of this problem?

Our tutors rated the difficulty ofOn July 1, 2006, Gerdin Company borrowed $100,000. The compa...as medium difficulty.