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On August 1, Year 1 Hernandez Company loaned $48,000 cash to Acosta Company. The one-year note...

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Accounting

On August 1, Year 1 Hernandez Company loaned $48,000 cash toAcosta Company. The one-year note carried a 5% rate of interest.Which of the following shows how the accrual of interest revenue inYear 2 will effect Hernandez’s financial statements?

BalancesheetIncomeStatementStatementof
Cash Flows
Assets=Liab.+EquityRev.?Exp.=NetInc.
A.1,400=NA+1,4001,400?NA=1,400NA
B.1,400=NA+1,4001,400?NA=1,4001,400 OA
C.1,000=NA+1,0001,000?NA=1,000NA
D.1,000=NA+1,0001,000?NA=1,0002,400 OA

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