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. M

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Assume Cain lends $1,000 to Abel and takes back a Note whichmatures in 1 year and the borrowing rate is 4% per annum.
Multiple Choice
If Cain prepares financial statements prior to the maturity dateof the note, he will have to make an adjusting entry to set up theinterest expense incurred
None of the other statements are correct
If the note is paid on maturity then Abel will record $40 ininterest income
If the note is dishonoured on maturity then Abel will set up areceivable for more than $1,000
If the note is paid on maturity then Abel will record $40 ininterest expense