Exam 14: Notes Receivable and Notes Payable

Given the following accounts: [1] Cash [2] Notes receivable [3] Accounts receivable [4] Interest receivable [5] Notes payable [6] Accounts payable [7] Interest payable [8] Discount on notes payable [9] Interest expense [10] Interest income [11] Sales Indicate the account(s) to be debited and credited to record the following transactions. -Sold merchandise on account. Debit ________ & ________ Credit ________ & ________

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

Find the maturity dates for the following: a)A 123-day note date March 22. b)A 5-month note dated January 31. c)A 75-day note dated February 21,2012,a leap year.

Prepare general journal entries for Huckabee Corporation for the following transactions: 200x $\text {Dec. 1}$ $\quad$ $\text {Disccunted its own \$ 32,400,60 - d a y , 9 \% note at Colo Bank. }$ $\quad$ $\quad$ $\text {31}$ $\quad$ $\text { Accrued the interest expense on the discounted note.}$ 200x $\text { Jan. } 15 \quad \text { Paid the discounted note. }$

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

Interest on a $3,000,10% promissory note for four months is:

Both Accounts Payable and Notes Payable are both informal promises to pay.

Chase Hunford negotiated a $40,000 bank loan for 240 days at a bank rate of 10%.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 Chase received from the bank. c)Calculate the effective interest rate charged by the bank. d)Prepare Chase's journal entry for the transaction.

When a note receivable is discounted,the business that endorses the note becomes potentially liable to the bank.This type of liability is called a:

Steadman's Computer endorses a customer's note dated June 17 to the bank on August The interest rate on the note is 10%,and the bank discount rate is 12%.The note matures on September 6.The discount period is:

Prepare the journal entries for Fit City Company for the following transactions: a)Fit sold $9,500 of merchandise to AllSport Company on account. b)Fit City received a 90-day,$9,500,10% note for a time extension of past-due account of AllSport. c)Collected the AllSport note on the maturity date.

Colo Bank accepts a promissory note for $3,000 from a customer on November 1,to be repaid in seven months plus 8% interest.The maturity value of the note is:

Explain what happens to assets and to liabilities when a borrower issues a note payable for the purchase of equipment?

When calculating the interest on a note receivable 365 days instead of 360 days was used.This error would cause:

When a commercial bank discounts a note on the date of issue,the interest is deducted in advance.

Sold merchandise on account would have which effect on the following categories?

Johnson accepts a $5,000,7%,100-day promissory note from Adam on November 1.What is the adjusting entry made by Johnson on December 31 to recognize the interest (using a 360-day year)?

Using a 360-day year,interest calculated for 180 days on a $7,000,9% promissory note 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). - Column 1 Column 2 Column 3 Column 4 Discount on notes payable

In the basic formula for calculating interest,rate refers to: