On July 1, 2012, Watson Company received a $20,000 promissory note for services

Question

On July 1, 2012, Watson Company received a $20,000 promissory note for services from Jeffs Company. The annual interest rate is 5%. Principal and interest are paid in cash at the maturity date of June 30, 2013. The effect on Watson's financial statements on July 1, 2012 is as follows.

Assets increase; owners' equity increases.

Assets decrease and owners' equity decreases.

Assets decrease.

No net change in assets.

Assets increase; owners' equity increases.

Assets decrease and owners' equity decreases.

Assets decrease.

No net change in assets.

Explanation / Answer

Assets increase; owners' equity increases.

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.