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?
| Balancesheet | IncomeStatement | Statementof
Cash Flows |
| Assets | = | Liab. | + | Equity | Rev. | ? | Exp. | = | NetInc. |
| A. | 1,400 | = | NA | + | 1,400 | 1,400 | ? | NA | = | 1,400 | NA |
| B. | 1,400 | = | NA | + | 1,400 | 1,400 | ? | NA | = | 1,400 | 1,400 OA |
| C. | 1,000 | = | NA | + | 1,000 | 1,000 | ? | NA | = | 1,000 | NA |
| D. | 1,000 | = | NA | + | 1,000 | 1,000 | ? | NA | = | 1,000 | 2,400 OA |
