Determining Financial Statement Effects of Transactions Involving Notes PayableUsing the d...

Determining Financial Statement Effects of Transactions Involving Notes Payable

Using the data from the previous exercise, complete the following requirements.

Required:

1. Determine the financial statement effects for each of the following: (a) issuance of the note on November 1. (b) the impact of the adjusting entry at the end of the accounting period, and (c| payment of the note and interest on April 30. 2012. Indicate the effects (e.g., cash + or —) using the following schedule:

2. If Neiman Marcus needs extra cash during every Christmas season, should management borrow money on a lone-term basis to avoid the necessity of negotiating a new short-term loan each year?