Question 1

Accrued Interest Expense adjusts for interest incurred during the period but has not been paid or recorded because payment is not yet due.

Accepted Answer

A) True 
 B)False

Question 2

A note renewed at maturity would have the following effects for a buyer:

Accepted Answer

A)  debit to Notes Payable (new); debit to Notes Payable (old); credit to Cash; credit to Interest Expense. 
B)  debit to Notes Payable (old); debit to Cash; credit to Notes Payable (new); credit to Interest Expense. 
C)  debit to Notes Payable (old); credit to Notes Payable (new); credit to Cash; credit to Interest Expense. 
D)  debit to Notes Payable (old); debit to Interest Expense; credit to Cash; credit to Notes Payable (new). 
A)  debit to Notes Payable (new); debit to Notes Payable (old); credit to Cash; credit to Interest Expense. 
B)  debit to Notes Payable (old); debit to Cash; credit to Notes Payable (new); credit to Interest Expense. 
C)  debit to Notes Payable (old); credit to Notes Payable (new); credit to Cash; credit to Interest Expense. 
D)  debit to Notes Payable (old); debit to Interest Expense; credit to Cash; credit to Notes Payable (new).

Question 3

Martin Company needs additional time to pay its accounts payable to Boster Company. Martin makes a written promise to pay Boster the amount on a certain date. Martin records this transaction as follows:

Accepted Answer

A)  debit Notes Payable; credit Accounts Payable. 
B)  debit Cash; credit Accounts Payable. 
C)  debit Accounts Payable; credit Notes Payable. 
D)  debit Notes Payable; credit Cash. 
A)  debit Notes Payable; credit Accounts Payable. 
B)  debit Cash; credit Accounts Payable. 
C)  debit Accounts Payable; credit Notes Payable. 
D)  debit Notes Payable; credit Cash.

Question 4

Marble Company discounts a customer's 8%, $4,000, 90-day note dated April 1, on May 15. The discount period is 45 days, and the bank discount rate is 15%. The maturity value of the note is $4,080. The bank discount is: (Use a 360-day year. Do not round any intermediate calculations. Round your final answer to the nearest dollar.)

Accepted Answer

A)  $10. 
B)  $153. 
C)  $77. 
D)  $80. 
A)  $10. 
B)  $153. 
C)  $77. 
D)  $80.

Question 5

What is the adjustment to Interest Income on December 31 if Pristine Company (the holder of the note) receives a $26,000, 90-day, 7% note on December 10th from Elegant Company (debtor)? (Use a 360-day year. Do not round any intermediate calculations. Round your final answer to the nearest dollar.)

Accepted Answer

A)  $455 
B)  $1,820 
C)  $111 
D)  $106 
A)  $455 
B)  $1,820 
C)  $111 
D)  $106

Question 6

Prepare the journal entries for Shirts Plus for the following transactions:
a) Shirts Plus sold $8,100 of merchandise to Beck Company on account. The cost of the sale to Shirts Plus is $4,500. The company uses the periodic method.
b) Shirts Plus received a 60-day, $8,100, 9% note for a time extension of past-due account of Beck Company.
c) Collected Beck Company's note on the maturity date.

Accepted Answer

The answer of Prepare the journal entries for Shirts Plus...

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).
-

Accepted Answer

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

Question 8

To obtain an extension of time for the payment of an account, a customer may issue a note for any portion of the amount due.

Accepted Answer

A) True 
 B)False

Question 9

Calculate the simple interest for the following:
a) $13,500, 11%, 112 days
b) $8,200, 6%, 5 months
c) $19,250, 7.5%, 1 year

Accepted Answer

a) $462
b)

Question 10

Feinstein Analytics is borrowing $12,400 at 8% interest for one year. The $12,400 is the:

Accepted Answer

A)  principal. 
B)  proceeds. 
C)  amount of interest. 
D)  net amount. 
A)  principal. 
B)  proceeds. 
C)  amount of interest. 
D)  net amount.

Question 11

What is the holder of the note's entry to record the proceeds of a note received, with interest accrued in the previous year (assume there is no reversing entry)?

Accepted Answer

A)  Debit Cash; credit Interest Receivable; credit Notes Receivable; credit Interest Income 
B)  Debit Notes Payable; debit Interest Expense; debit Interest Payable; credit Cash 
C)  Debit Cash; debit Interest Expense; credit Notes Payable 
D)  Debit Notes Receivable; debit Interest Income; credit Cash 
A)  Debit Cash; credit Interest Receivable; credit Notes Receivable; credit Interest Income 
B)  Debit Notes Payable; debit Interest Expense; debit Interest Payable; credit Cash 
C)  Debit Cash; debit Interest Expense; credit Notes Payable 
D)  Debit Notes Receivable; debit Interest Income; credit Cash

Question 12

Bert Morrison negotiated a $40,000 bank loan for 180 days at a bank rate of 14%. The bank deducted the interest in advance.
Required (show your calculations):
a) Calculate the amount of interest charged by the bank.
b) Calculate the amount of cash Bert received from the bank.
c) Calculate the effective interest rate charged by the bank.
d) Prepare Bert's journal entry for the transaction.

Accepted Answer

a) $40,000 × .14 × 180/360 = $

Question 13

In the interest calculation formula, time is expressed:

Accepted Answer

A)  in days only. 
B)  in years or fraction of a year. 
C)  in months only. 
D)  in years only. 
A)  in days only. 
B)  in years or fraction of a year. 
C)  in months only. 
D)  in years only.

Question 14

What is the adjusting entry to record interest for Elegant Company (the debtor) as of December 31 if Pristine Company (the holder of the note) receives a $29,000, 90-day, 12% note on December 10th from Elegant Company (debtor)? (Use a 360-day year. Do not round any intermediate calculations. Round your final answer to the nearest dollar.)

Accepted Answer

A)  Debit to Interest Income of $870; credit to Interest Receivable of $870. 
B)  Debit to Interest Payable of $203; credit to Interest Expense of $203. 
C)  Debit to Interest Expense of $203; credit to Interest Payable of $203. 
D)  Debit to Interest Receivable of $870; credit to Interest Income of $870. 
A)  Debit to Interest Income of $870; credit to Interest Receivable of $870. 
B)  Debit to Interest Payable of $203; credit to Interest Expense of $203. 
C)  Debit to Interest Expense of $203; credit to Interest Payable of $203. 
D)  Debit to Interest Receivable of $870; credit to Interest Income of $870.

Question 15

The maturity date of a 60-day note dated March 8 is May 8.

Accepted Answer

A) True 
 B)False

Question 16

A written promise to pay a certain sum of money to another person or company is a(n):

Accepted Answer

A)  Accounts Payable. 
B)  Note Payable. 
C)  Accounts Receivable. 
D)  Note Receivable. 
A)  Accounts Payable. 
B)  Note Payable. 
C)  Accounts Receivable. 
D)  Note Receivable.

Question 17

Prepare the journal entries for the following transactions for Dobson Industries Company.
a) Dobson sold $8,000 of merchandise to Bolt Imports Company on account. The company uses the periodic inventory method.
b) Dobson accepted a 90-day, 7% note from Bolt in settlement of its account.
c) Bolt defaulted on its note on the maturity date.
d) Collected the previously defaulted Bolt note plus $25 additional interest.

Accepted Answer

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

Question 18

Canton Graphics issues a $13,000, 7.5%, 2-year note to Bowden Corporation. Interest on the note is _________ and the maturity value is __________.

Accepted Answer

A)  $1,950; $14,950 
B)  $1,950; $13,000 
C)  $14,950; $1,950 
D)  $13,000; $1,950 
A)  $1,950; $14,950 
B)  $1,950; $13,000 
C)  $14,950; $1,950 
D)  $13,000; $1,950

Question 19

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 20

When an account receivable is exchanged for a note receivable, a shift in liability occurs.

Accepted Answer

A) True 
 B)False

Accrued Interest Expense adjusts for interest incurred during the period but has not been paid or recorded because payment is not yet due.

A note renewed at maturity would have the following effects for a buyer:

Martin Company needs additional time to pay its accounts payable to Boster Company. Martin makes a written promise to pay Boster the amount on a certain date. Martin records this transaction as follows:

What is the adjustment to Interest Income on December 31 if Pristine Company (the holder of the note) receives a $26,000, 90-day, 7% note on December 10th from Elegant Company (debtor)? (Use a 360-day year. Do not round any intermediate calculations. Round your final answer to the nearest dollar.)

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). -

To obtain an extension of time for the payment of an account, a customer may issue a note for any portion of the amount due.

Calculate the simple interest for the following: a) $13,500, 11%, 112 days b) $8,200, 6%, 5 months c) $19,250, 7.5%, 1 year

Feinstein Analytics is borrowing $12,400 at 8% interest for one year. The $12,400 is the:

What is the holder of the note's entry to record the proceeds of a note received, with interest accrued in the previous year (assume there is no reversing entry)?

In the interest calculation formula, time is expressed:

The maturity date of a 60-day note dated March 8 is May 8.

A written promise to pay a certain sum of money to another person or company is a(n):

Canton Graphics issues a $13,000, 7.5%, 2-year note to Bowden Corporation. Interest on the note is _ and the maturity value is __.

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). -

When an account receivable is exchanged for a note receivable, a shift in liability occurs.

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

Exam 14: Notes Receivable and Notes Payable

Accrued Interest Expense adjusts for interest incurred during the period but has not been paid or recorded because payment is not yet due.

A note renewed at maturity would have the following effects for a buyer:

Martin Company needs additional time to pay its accounts payable to Boster Company. Martin makes a written promise to pay Boster the amount on a certain date. Martin records this transaction as follows:

What is the adjustment to Interest Income on December 31 if Pristine Company (the holder of the note) receives a $26,000, 90-day, 7% note on December 10th from Elegant Company (debtor)? (Use a 360-day year. Do not round any intermediate calculations. Round your final answer to the nearest dollar.)

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). -

To obtain an extension of time for the payment of an account, a customer may issue a note for any portion of the amount due.

Calculate the simple interest for the following: a) $13,500, 11%, 112 days b) $8,200, 6%, 5 months c) $19,250, 7.5%, 1 year

Feinstein Analytics is borrowing $12,400 at 8% interest for one year. The $12,400 is the:

What is the holder of the note's entry to record the proceeds of a note received, with interest accrued in the previous year (assume there is no reversing entry)?

In the interest calculation formula, time is expressed:

The maturity date of a 60-day note dated March 8 is May 8.

A written promise to pay a certain sum of money to another person or company is a(n):

Canton Graphics issues a $13,000, 7.5%, 2-year note to Bowden Corporation. Interest on the note is _________ and the maturity value is __________.

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). -

When an account receivable is exchanged for a note receivable, a shift in liability occurs.

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

Canton Graphics issues a $13,000, 7.5%, 2-year note to Bowden Corporation. Interest on the note is _ and the maturity value is __.