Assume Cain lends $1,000 to Abel and takes back a Note which matures in 1 year and the borrowing rate is 4% per annum.
a.If the note is paid on maturity then Abel will record $40 in interest income
b.If the note is dishonoured on maturity then Abel will set up a receivable for more than $1,000
c.If the note is paid on maturity then Abel will record $40 in interest expense
d.If Cain prepares financial statements prior to the maturity date of the note, he will have to make an adjusting entry to set up the interest expense incurred
e.None of the other statements are correct
