Exam 14: Notes Receivable and Notes Payable

Morris Law Firm is borrowing $10,000 at 6% interest for one year.The $10,000 is the:

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 Sales

How would you compute the accrued interest expense on December 31 for a $5,000 note payable for 73 days at 8% interest dated November 22?

A $10,000,7% note is dated May 18 and is due in 60 days.The due date would be:

Maturity value is Principal + Discount.

For notes payable issued in one period and due in the next period,accrued interest payable must be recorded at the end of the period.

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. -Accrued interest on a note payable. Debit ________ & ________ Credit ________ & ________

Calculate the simple interest and maturity value for the following: a)$15,000,10%,2 1/2 years b)$ 3,800,7%,7 months c)$ 8,400,14%,90 days

On March 15,Ben Jones negotiated a $25,000 bank loan for 270 days at an interest rate of 8%. Required (show your calculations): a)Determine the due date of the note. b)Calculate the amount of interest charged by the bank. c)Calculate the maturity value of the note.

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

Harvey loaned $50 to Chase and received a promissory note.Chase is the:

Discount on Notes Payable is a contra-liability account that records interest deducted in advance.

Cory issued a note to his creditor in exchange for an account.Cory records the transaction as follows:

Prepare the journal entries for the following transactions for Dobson Industries Company. a)Dobson sold $5,000 of merchandise to Bolt Imports Company on account. b)Dobson accepted a 60-day,9% 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.

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.

Jane borrowed $1,000 from West Bank and signed a promissory note.Jane is:

In computing interest,it is required to consider a 365-day year.

Receiving payment from a customer on an interest bearing note would entail a credit to Interest Income.

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

The effective interest rate on a discounted note payable is greater than the rate on the note.