Question 1

The total that must be paid when a note becomes due is known as the

Accepted Answer

A) principal. 
B) maturity value. 
C) note value. 
D) face value. 
A) principal. 
B) maturity value. 
C) note value. 
D) face value. B

Question 2

A firm purchased equipment for $16,000 on credit and issued a 120-day note bearing interest at 9 percent as evidence of the debt. The journal entry to record payment of the note at maturity is

Accepted Answer

A) debit Notes Payable for $16,000 and credit Equipment for $16,000. 
B) debit Cash for $16,480 and credit Notes Payable for $16,480. 
C) debit Notes Payable for $16,480, credit Interest Expense $480, and credit Notes Payable for
$16,000. 
D) debit Notes Payable for $16,000, debit Interest Expense $480, and credit Cash for $16,480. 
A) debit Notes Payable for $16,000 and credit Equipment for $16,000. 
B) debit Cash for $16,480 and credit Notes Payable for $16,480. 
C) debit Notes Payable for $16,480, credit Interest Expense $480, and credit Notes Payable for
$16,000. 
D) debit Notes Payable for $16,000, debit Interest Expense $480, and credit Cash for $16,480. D

Question 3

The maturity value of a 60-day note for $9,000 that bears interest at 6 percent is (Assume 360 days in a year.)

Accepted Answer

A) $9,000. 
B) $9,090. 
C) $9,540. 
D) $8,460. 
A) $9,000. 
B) $9,090. 
C) $9,540. 
D) $8,460. B

Question 4

The amount of cash paid on the maturity date on a $9,000 face value, 60-day note bearing interest at 8 percent is-------- .

Accepted Answer

The answer of The amount of cash paid on the...

Question 5

The Interest Expense account normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 6

The due date of a 120-day note dated October 9, is

Accepted Answer

A) February 5. 
B) February 6. 
C) February 7. 
D) February 8. 
A) February 5. 
B) February 6. 
C) February 7. 
D) February 8.

Question 7

Compute the maturity value of a 5-month, 8 percent note with a face value of $8,000. (round answer to 2 decimal places)

Accepted Answer

The answer of Compute the maturity value of a 5-month,...

Question 8

Interest Income is classified as a current asset.

Accepted Answer

A) True 
 B)False

Question 9

The Hernandez Company had the following transactions involving notes receivable during 2019. Record the transactions on page 6 of a general journal. Omit descriptions.
July 1 Received a 3 month, 8 percent note for $9,000 from Lincoln Company, a customer whose account was overdue.
October 1 The note issued by Lincoln Company was dishonored today.

Accepted Answer

The answer of The Hernandez Company had the following transactions...

Question 10

Even if an interest-bearing note receivable is dishonored, the interest income due on the note should be recorded.

Accepted Answer

A) True 
 B)False

Question 11

Notes payable due within one year are shown in the

Accepted Answer

A) Current Assets section of the balance sheet. 
B) Long-Term Liabilities section of the balance sheet. 
C) Other Expenses section of the income statement. 
D) Current Liabilities section of the balance sheet. 
A) Current Assets section of the balance sheet. 
B) Long-Term Liabilities section of the balance sheet. 
C) Other Expenses section of the income statement. 
D) Current Liabilities section of the balance sheet.

Question 12

The maturity value of a 60-day note for $12,000 that bears interest at 8 percent is (Assume 360 days in a year.)

Accepted Answer

A) $12,160. 
B) $11,840. 
C) $12,960. 
D) $11,040. 
A) $12,160. 
B) $11,840. 
C) $12,960. 
D) $11,040.

Question 13

Explain when and why the Notes Receivable Discounted account is used.

Accepted Answer

When a note receivable is discounted, th

Question 14

The journal entry to record the collection of a Note Receivable at maturity value for a 120-day,
$36,000, 9 % note would include

Accepted Answer

A) debit to Interest Expense for $1,080. 
B) credit to Notes Receivable for $37,080. 
C) debit to cash for $36,000. 
D) credit to Interest Income for $1,080. 
A) debit to Interest Expense for $1,080. 
B) credit to Notes Receivable for $37,080. 
C) debit to cash for $36,000. 
D) credit to Interest Income for $1,080.

Question 15

The maturity value of a $12,000 face value, 180-day note bearing interest at 10 percent is (Assume 360 days in a year.)

Accepted Answer

A) $600. 
B) $12,600. 
C) $1,200. 
D) $13,200. 
A) $600. 
B) $12,600. 
C) $1,200. 
D) $13,200.

Question 16

A dishonored note is converted to Accounts Receivable at its maturity value.

Accepted Answer

A) True 
 B)False

Question 17

On July 5, 2019, the Cowens Company accepted a 90-day, 10 percent note from Rhonda Ballard in settlement of her past-due account for $5,000. On Aug. 4, the Cowens Company discounted the note at the Investment Capital Bank. The bank charged a discount rate of 6 percent. Answer the following questions.
1. What is the maturity date of the note?
2. What is the maturity value of the note?
3. How many days are in the discount period?
4. What is the amount of the discount?
5. What is the amount of the proceeds?

Accepted Answer

1.Oct. 3, 2019; 2. $

Question 18

On October 10, 2019, the Berkeley Company accepted a 60-day, 9 percent note from Devon Reed in settlement of his past-due account for $3,000. On November 9, Berkeley Company discounted the note at the Security Bank. The bank charged a discount rate of 12 percent. Answer the following questions. (round your answers to 2 decimal places)
1. What is the maturity date of the note?
2. What is the maturity value of the note?
3. How many days are in the discount period?
4. What is the amount of the discount?
5. What is the amount of the proceeds?

Accepted Answer

1. December 9, 2019;

Question 19

The entry to record the collection of a note receivable on the maturity date includes a debit to Notes Receivable.

Accepted Answer

A) True 
 B)False

Question 20

The due date of a 40-day note dated October 12, is

Accepted Answer

A) November 19. 
B) November 20. 
C) November 21. 
D) November 22. 
A) November 19. 
B) November 20. 
C) November 21. 
D) November 22.

Exam 16: Notes Payable and Notes Receivable

The total that must be paid when a note becomes due is known as the

A firm purchased equipment for $16,000 on credit and issued a 120-day note bearing interest at 9 percent as evidence of the debt. The journal entry to record payment of the note at maturity is

The maturity value of a 60-day note for $9,000 that bears interest at 6 percent is (Assume 360 days in a year.)

The amount of cash paid on the maturity date on a $9,000 face value, 60-day note bearing interest at 8 percent is-------- .

The Interest Expense account normally has a debit balance.

The due date of a 120-day note dated October 9, is

Compute the maturity value of a 5-month, 8 percent note with a face value of $8,000. (round answer to 2 decimal places)

Interest Income is classified as a current asset.

Even if an interest-bearing note receivable is dishonored, the interest income due on the note should be recorded.

Notes payable due within one year are shown in the

The maturity value of a 60-day note for $12,000 that bears interest at 8 percent is (Assume 360 days in a year.)

Explain when and why the Notes Receivable Discounted account is used.

The journal entry to record the collection of a Note Receivable at maturity value for a 120-day, $36,000, 9 % note would include

The maturity value of a $12,000 face value, 180-day note bearing interest at 10 percent is (Assume 360 days in a year.)

A dishonored note is converted to Accounts Receivable at its maturity value.

The entry to record the collection of a note receivable on the maturity date includes a debit to Notes Receivable.

The due date of a 40-day note dated October 12, is

Accounting: The Language of Business

Analyzing Business Transactions

Analyzing Business Transactions Using T Accounts

The General Journal and the General Ledger

Adjustments and the Worksheet

Closing Entries and Teh Postclosing Trial Balance

Accounting for Sales and Accounts Receivable

Accounting for Purchases and Accounts Payable

Cash Receipts, Cash Payments, and Banking Procedures

Payroll Computations, Records, and Payment

Payroll Taxes, Deposits, and Reports

Accruals, Deferrals, and the Worksheet

Financial Statements and Closing Procedures

Accounting Principles and Reporting Standards

Accounts Receivable and Uncollectible Accounts

Merchandise Inventory

Property, Plant, and Equipment

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analysis

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

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