Assets decrease and owners equity decreases

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Reference no: EM13804327

On July 1, 2012, Watson Company received a $20,000 promissory note for services from Jeffs Company. The annual interest rate is 5%. Principal and interest are paid in cash at the maturity date of June 30, 2013. The effect on Watson's financial statements on July 1, 2012 is as follows.

Assets increase; owners' equity increases.

Assets decrease and owners' equity decreases.

Assets decrease.

No net change in assets.

Reference no: EM13804327

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