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On November 1, Year 1 Shelter Company loaned $7,000 cash to Cove Company. The one-year note...

On November 1, Year 1 Shelter Company loaned $7,000 cash to Cove Company. The one-year note carried a 7% rate of interest. Which of the following shows how the loan will affect Shelter’s financial statements on November 1, Year 1?

Balance sheet Income Statement Statement of
Cash Flows
Assets = Liab. + Equity Rev. − Exp. = Net Inc.
A. NA = NA + NA NA − NA = NA (7,000) IA
B. NA = NA + NA NA − NA = NA (7,000) FA
C. 7,000 = 7,000 + NA NA − NA = NA 7,000 FA
D. (7,000) = (7,000) + NA NA − NA = NA (7,000) IA
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