Prepare journal entries to record (a) issuance of the note, (b) accrual of interest at the end of 2017, and (c) payment of the note at maturity. (Assume no reversing entries are made.) (Use 360 days a year. Round final answers to the nearest whole dollar.)Ĥ. What is the amount of interest expense in 20 from this note? (Use 360 days a year. On what date does this note mature? (Assume that February has 28 days)Ģ. borrows $155,000 cash on November 1, 2017, by signing a 120-day, 10% note with a face value of $155,000. Prepare the journal entry to record issuance of the note. Assume the face value of the note equals $170,000, the principal of the loan.

Sylvestor Systems borrows $170,000 cash on May 15, 2017, by signing a 60-day, 7% note.Ģ. The net change in cash on the cash flow statement and cash from the previous period’s balance sheet comprise cash for this period.Home » Online Exam Help » Accounting Exam Help » Connect Financial Accounting Chapter 9 Connect Financial Accounting Chapter 9 Also, any non-cash expenses or non-cash income from the income statement (i.e., depreciation and amortization) flow into the cash flow statement and adjust net income to arrive at cash flow from operations.Īny balance sheet items that have a cash impact (i.e., working capital, financing, PP&E, etc.) are linked to the cash flow statement since it is either a source or use of cash. In terms of the cash flow statement, net income is the first line as it is used to calculate cash flows from operations. Retained earnings is equal to the previous period’s retained earnings plus net income from this period less dividends from this period. In terms of the balance sheet, net income flows into stockholder’s equity via retained earnings.

Net income links to both the balance sheet and cash flow statement. The bottom line of the income statement is net income. Poor answers are ones that are too wordy or miss key linkages. To successfully answer this question, make sure you have the financial accounting fundamentals down pat. How to Answer this Question: How Are the Three Financial Statements Linked Together? For this question, you’ll need basic accounting knowledge. Note: We continue our series on investment banking interview questions with this investment banking interview financial statements question example.

Connect financial accounting