Question 1

An advantage of a promissory note receivable over an account receivable is that it:

Accepted Answer

A) establishes formal proof against the borrower. 
B) has a specified interest rate and maturity date. 
C) collects interest revenue from the borrower. 
D) All of these answers are correct. 
A) establishes formal proof against the borrower. 
B) has a specified interest rate and maturity date. 
C) collects interest revenue from the borrower. 
D) All of these answers are correct.

Question 2

Using a 360-day year,interest calculated for 90 days on a $9,000,6% promissory note is:

Accepted Answer

A) $135. 
B) $540. 
C) $450. 
D) some other amount. 
A) $135. 
B) $540. 
C) $450. 
D) some other amount.

Question 3

Sold merchandise on account.Assume the periodic method.
Debit ________ Credit ________

Accepted Answer

The answer of Sold merchandise on account.Assume the periodic method.
Debit...

Question 4

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent).
-$$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column 1 } & \text { Column 2 } & \text { Column 3 } & \text { Column } 4 \
\hline \text { Interest expense } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following, identify in...

Question 5

The accounting department forgot to adjust for interest on the note payable.This error would cause:

Accepted Answer

A) the period end assets to be understated. 
B) the period end liabilities to be understated. 
C) the period's net income to be understated. 
D) None of these answers is correct. 
A) the period end assets to be understated. 
B) the period end liabilities to be understated. 
C) the period's net income to be understated. 
D) None of these answers is correct.

Question 6

A note that is not paid on the maturity date is considered discounted.

Accepted Answer

A) True 
 B)False

Question 7

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent).
-$$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column } 1 & \text { Column 2 } & \text { Column } 3 & \text { Column } 4 \
\hline \text { Notes receivable } & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following, identify in...

Question 8

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent).
-$$\begin{array} { | l | l | l | l | l | } 
\hline & \text { Column } 1 & \text { Column } 2 & \text { Column } 3 & \text { Column } 4 \
\hline \begin{array} { l } 
\text { Discount on } \
\text { notes payable }
\end{array} & & & & \
\hline
\end{array}$$

Accepted Answer

The answer of For each of the following, identify in...

Question 9

Purchased merchandise (periodic)issuing a note would have which effect on the categories?

Accepted Answer

A) Total assets would be increased. 
B) Total liabilities would be increased. 
C) Owner's equity would be decreased. 
D) Both B and C would be correct. 
A) Total assets would be increased. 
B) Total liabilities would be increased. 
C) Owner's equity would be decreased. 
D) Both B and C would be correct.

Question 10

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent).
-

Accepted Answer

The answer of For each of the following, identify in...

Question 11

The maturity date of a 60-day note dated April 5 is June 4.

Accepted Answer

A) True 
 B)False

Question 12

Trust Worthy Bank accepts a promissory note for $6,000 from a customer on November 1,to be repaid in eight months plus 6% interest.The maturity value of the note is:

Accepted Answer

A) $6,240. 
B) $6,140. 
C) $6,075. 
D) $6,000. 
A) $6,240. 
B) $6,140. 
C) $6,075. 
D) $6,000.

Question 13

Prepare journal entries for the following transactions for Sysco Imports Company.
a)Purchased $6,000 of merchandise (periodic)from Clarke Industries Company on account.
b)Gave Clarke Industries Company a 150-day,6% note in settlement of the account payable.
c)Sysco defaulted on its note on the maturity date.
d)Sysco paid the previously defaulted note plus $25 additional interest.

Accepted Answer

The answer of Prepare journal entries for the following transactions...

Question 14

Purchased merchandise (perpetual),by issuing a note,would have which effect on the categories?

Accepted Answer

A) Total assets would be decreased. 
B) Total liabilities would be increased. 
C) Owner's equity would be decreased. 
D) None of these answers is correct. 
A) Total assets would be decreased. 
B) Total liabilities would be increased. 
C) Owner's equity would be decreased. 
D) None of these answers is correct.

Question 15

The interest rate stated on a note for 90 days is:

Accepted Answer

A) stated on a daily basis. 
B) stated on a monthly basis. 
C) stated on an annual basis. 
D) indeterminable. 
A) stated on a daily basis. 
B) stated on a monthly basis. 
C) stated on an annual basis. 
D) indeterminable.

Question 16

Given a 360-day year,the interest expense on a $10,000,6%,90-day promissory note payable is:

Accepted Answer

A) $150. 
B) $1500 
C) $510. 
D) some other amount. 
A) $150. 
B) $1500 
C) $510. 
D) some other amount.

Question 17

An adjustment that must be made for the accrued interest on a note receivable would include a:

Accepted Answer

A) debit to Note Receivable. 
B) credit to Interest Receivable. 
C) debit to Interest Receivable. 
D) credit to Note Receivable. 
A) debit to Note Receivable. 
B) credit to Interest Receivable. 
C) debit to Interest Receivable. 
D) credit to Note Receivable.

Question 18

On November 6,an 10%,90-day,$4,000 note was accepted by Carmen in exchange for merchandise.What entry does Carmen make on December 31 to recognize the interest?

Accepted Answer

A) Credit Interest Receivable;debit Interest Income $61.11 
B) Debit Interest Receivable;credit Interest Income for $61.11 
C) Debit Interest Receivable;credit Interest Income for $100.00 
D) None of these answers is correct. 
A) Credit Interest Receivable;debit Interest Income $61.11 
B) Debit Interest Receivable;credit Interest Income for $61.11 
C) Debit Interest Receivable;credit Interest Income for $100.00 
D) None of these answers is correct.

Question 19

Find the maturity dates for the following:
a)A 103-day note dated April 22.
b)A 6-month note dated March 31.
c)A 80-day note dated February 12,2016,a leap year.

Accepted Answer

a)August 3

Question 20

A $12,000,5% note is dated May 18 and is due in 90 days.Using a 360-day year,the maturity value would be:

Accepted Answer

A) $12,000. 
B) $12,050. 
C) $12,175. 
D) $12,150. 
A) $12,000. 
B) $12,050. 
C) $12,175. 
D) $12,150.

Exam 14: Notes Receivable and Notes Payable

An advantage of a promissory note receivable over an account receivable is that it:

Using a 360-day year,interest calculated for 90 days on a $9,000,6% promissory note is:

Sold merchandise on account.Assume the periodic method. Debit ________ Credit ________

The accounting department forgot to adjust for interest on the note payable.This error would cause:

A note that is not paid on the maturity date is considered discounted.

Purchased merchandise (periodic)issuing a note would have which effect on the categories?

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent). -

The maturity date of a 60-day note dated April 5 is June 4.

Trust Worthy Bank accepts a promissory note for $6,000 from a customer on November 1,to be repaid in eight months plus 6% interest.The maturity value of the note is:

Purchased merchandise (perpetual),by issuing a note,would have which effect on the categories?

The interest rate stated on a note for 90 days is:

Given a 360-day year,the interest expense on a $10,000,6%,90-day promissory note payable is:

An adjustment that must be made for the accrued interest on a note receivable would include a:

On November 6,an 10%,90-day,$4,000 note was accepted by Carmen in exchange for merchandise.What entry does Carmen make on December 31 to recognize the interest?

Find the maturity dates for the following: a)A 103-day note dated April 22. b)A 6-month note dated March 31. c)A 80-day note dated February 12,2016,a leap year.

A $12,000,5% note is dated May 18 and is due in 90 days.Using a 360-day year,the maturity value would be:

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: the Beginning of the Payroll Process

Paying,recording,and Reporting Payroll and Payroll Taxes:

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Accounting for Merchandise Inventory

Accounting for Property,plant,equipment,and Intangible Assets

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values,dividends,treasury Stocks,

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

Filters

Sold merchandise on account.Assume the periodic method. Debit Credit