Saba Company Borrowed $10,000 from the Bank by Issuing a Promissory

question 107

Essay

Saba Company borrowed $10,000 from the bank by issuing a promissory note on June 1,2012.The note had a one-year term and a 6 percent annual interest rate.On December 31,2012,Saba accrued the interest on the note.
Required:
Show how the issuance of the note and accrual of interest affect the financial statements by using the horizontal model provided.Indicate the dollar amount of increases and decreases; enter NA if an item is not affected.In the cash flows column,designate cash flows as operating activities (OA),investing activities (IA.or financing activities (FA).

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Definitions:

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, thereby having an interest in the company's performance and governance.

Corporation

A corporation is a legal entity that is separate and distinct from its owners, offering limited liability protection to its shareholders.

Actual Authority

Authority given to an agent expressly or by implication.

Estoppel

An equitable remedy that stops a party from trying to establish a position or deny something that, if allowed, would create an injustice.