Question 1

The maturity value of a $14,000, 6%, 9-month note is:

Accepted Answer

A)  $630. 
B)  $14,000. 
C)  $14,630. 
D)  $13,370. 
A)  $630. 
B)  $14,000. 
C)  $14,630. 
D)  $13,370.

Question 2

A seller may accept a note from a buyer as a result of an exchange for an equipment purchase.

Accepted Answer

A) True 
 B)False

Question 3

What is the adjustment to Interest Expense on December 31 if Elegant Company (debtor) owes Pristine Company (the holder of the note) a $22,000, 60-day, 10% note on December 12th? (Use a 360-day year. Do not round any intermediate calculations. Round your final answers to the nearest dollar.)

Accepted Answer

A)  $2,200 
B)  $116 
C)  $367 
D)  $61 
A)  $2,200 
B)  $116 
C)  $367 
D)  $61

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).
-

Accepted Answer

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

Question 5

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 6

Find the maturity dates for the following:
a) A 95-day note dated February 18, no leap year.
b) A 5-month note dated June 30.
c) A 1-year note dated April 10, 2018.

Accepted Answer

a) May 24

Question 7

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

Accepted Answer

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

Question 8

Interest on a $3,000, 5% promissory note for six months is:

Accepted Answer

A)  $75. 
B)  $7.50. 
C)  $750. 
D)  $0.75. 
A)  $75. 
B)  $7.50. 
C)  $750. 
D)  $0.75.

Question 9

A buyer pays a note in full on its maturity date. The buyer would record a:

Accepted Answer

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

Question 10

The journal entry for accrued interest on a note receivable includes:

Accepted Answer

A)  debiting Interest Income. 
B)  debiting Interest Expense. 
C)  crediting Interest Expense. 
D)  crediting Interest Income. 
A)  debiting Interest Income. 
B)  debiting Interest Expense. 
C)  crediting Interest Expense. 
D)  crediting Interest Income.

Question 11

The maker accepts payment on a note from a payee.

Accepted Answer

A) True 
 B)False

Question 12

Johnson issues a $3,000, 5%, 100-day promissory note to Adam on November 1. What is the adjusting entry made by Johnson on December 31 to recognize the interest (using a 360-day year)? (Do not round any intermediate calculations. Round your final answer to the nearest cent.)

Accepted Answer

A)  Debit Interest Expense; credit Interest Payable for $25.00 
B)  Debit Interest Expense; credit Interest Payable for $12.50 
C)  Debit Interest Receivable; credit Interest Income for $25.00 
D)  Debit Interest Receivable; credit Interest Income for $12.50 
A)  Debit Interest Expense; credit Interest Payable for $25.00 
B)  Debit Interest Expense; credit Interest Payable for $12.50 
C)  Debit Interest Receivable; credit Interest Income for $25.00 
D)  Debit Interest Receivable; credit Interest Income for $12.50

Question 13

An adjustment to interest from a note payable, incurred during the period, but not paid or recorded, is called:

Accepted Answer

A)  Notes Payable. 
B)  Accrued Interest Income. 
C)  Accrued Interest Expense. 
D)  Discount Payable Liability. 
A)  Notes Payable. 
B)  Accrued Interest Income. 
C)  Accrued Interest Expense. 
D)  Discount Payable Liability.

Question 14

What is the debtor's entry to record a note paid, with interest accrued in the previous year (assume there is a 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; credit Interest Income; credit Notes Receivable 
D)  Debit Notes Payable; debit Interest Expense; 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; credit Interest Income; credit Notes Receivable 
D)  Debit Notes Payable; debit Interest Expense; credit Cash

Question 15

The payee is the party to whom the note is payable.

Accepted Answer

A) True 
 B)False

Question 16

The maturity value for a $8,000, 81-day note at 10% interest is $180.

Accepted Answer

A) True 
 B)False

Question 17

Indicate the account(s) to be debited and credited to record the following transactions.
-Recording an adjusting entry for interest on the books of the seller (holder of the note).
Debit ________ Credit ________

Accepted Answer

A) Cash 
B)  Notes receivable 
C) Accounts receivable 
D)  Interest receivable 
E) Notes payable
F) Accounts payable
G)Interest payable
H) Discount on notes payable
I) Interest expense
J) Interest income
K) Sales 
A) Cash 
B)  Notes receivable 
C) Accounts receivable 
D)  Interest receivable 
E) Notes payable
F) Accounts payable
G)Interest payable
H) Discount on notes payable
I) Interest expense
J) Interest income
K) Sales

Question 18

On December 8, Kerrin Company recorded $300 interest deducted from a discounted note payable. What adjusting entry should record interest earned at the end of December?

Accepted Answer

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

Question 19

A 90-day note dated July 9 would be due on October 7.

Accepted Answer

A) True 
 B)False

Question 20

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...

Exam 14: Notes Receivable and Notes Payable

The maturity value of a $14,000, 6%, 9-month note is:

A seller may accept a note from a buyer as a result of an exchange for an equipment purchase.

What is the adjustment to Interest Expense on December 31 if Elegant Company (debtor) owes Pristine Company (the holder of the note) a $22,000, 60-day, 10% note on December 12th? (Use a 360-day year. Do not round any intermediate calculations. Round your final answers 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). -

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

Find the maturity dates for the following: a) A 95-day note dated February 18, no leap year. b) A 5-month note dated June 30. c) A 1-year note dated April 10, 2018.

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

Interest on a $3,000, 5% promissory note for six months is:

A buyer pays a note in full on its maturity date. The buyer would record a:

The journal entry for accrued interest on a note receivable includes:

The maker accepts payment on a note from a payee.

Johnson issues a $3,000, 5%, 100-day promissory note to Adam on November 1. What is the adjusting entry made by Johnson on December 31 to recognize the interest (using a 360-day year)? (Do not round any intermediate calculations. Round your final answer to the nearest cent.)

An adjustment to interest from a note payable, incurred during the period, but not paid or recorded, is called:

What is the debtor's entry to record a note paid, with interest accrued in the previous year (assume there is a reversing entry)?

The payee is the party to whom the note is payable.

The maturity value for a $8,000, 81-day note at 10% interest is $180.

Indicate the account(s) to be debited and credited to record the following transactions. -Recording an adjusting entry for interest on the books of the seller (holder of the note). Debit ________ Credit ________

On December 8, Kerrin Company recorded $300 interest deducted from a discounted note payable. What adjusting entry should record interest earned at the end of December?

A 90-day note dated July 9 would be due on October 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). -

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

Indicate the account(s) to be debited and credited to record the following transactions. -Recording an adjusting entry for interest on the books of the seller (holder of the note). Debit Credit