Use the information below to answer the following question(s):Indicate how each event affects the elements of financial statements. Use the following letters to record your answer in the box shown below each element. You do not need to enter amounts.Increase = I Decrease = D No Effect = NAOn September 1, Year 1, Ruiz Company loaned $10,000 to Alpha Company. Show the effect of the December 31, Year 1 adjusting entry to accrue interest on Ruiz's financial statements.
What will be an ideal response?
(I) (NA) (I) (I) (NA) (I) (NA)
The adjusting entry to recognize interest on the note receivable will increase assets (interest receivable) and stockholders' equity (retained earnings). It increases revenue (interest revenue), which increases net income. It does not affect the statement of cash flows.
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What will be an ideal response?
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