Question 1

Compute the amount of interest owed on a 6-month, 9 percent note for $6,000.

Accepted Answer

$270

Question 2

Which of the following statements is not correct?

Accepted Answer

A)  The entry to record the issuance of a promissory note includes a credit to Interest Payable for the amount of interest that will accrue on the note until it is paid at maturity. 
B)  The Notes Payable account is always debited or credited for the face value of a note. 
C)  The entry to record the issuance of a promissory note includes a credit to the Notes Payable account. 
D)  The entry to credit the payment of a note payable includes a debit to the Notes Payable Account. 
A)  The entry to record the issuance of a promissory note includes a credit to Interest Payable for the amount of interest that will accrue on the note until it is paid at maturity. 
B)  The Notes Payable account is always debited or credited for the face value of a note. 
C)  The entry to record the issuance of a promissory note includes a credit to the Notes Payable account. 
D)  The entry to credit the payment of a note payable includes a debit to the Notes Payable Account. A

Question 3

When a company issues a promissory note, the accountant records an entry that includes a credit to Note Payable for the

Accepted Answer

A)  face value of the note. 
B)  face value of the note plus the interest that will accrue. 
C)  face value less the interest that will accrue. 
D)  maturity value of the note. 
A)  face value of the note. 
B)  face value of the note plus the interest that will accrue. 
C)  face value less the interest that will accrue. 
D)  maturity value of the note. A

Question 4

Find the due date of a 90-day note issued on June 6, 2010.

Accepted Answer

The answer of Find the due date of a 90-day...

Question 5

The Interest Expense account usually has a credit balance.

Accepted Answer

A) True 
 B)False

Question 6

Notes payable due within one year are usually shown in the

Accepted Answer

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

Question 7

To obtain cash on delivery, goods may be shipped with a sight draft attached to a(n) __________________.

Accepted Answer

The answer of To obtain cash on delivery, goods may...

Question 8

Compute the amount of interest owed on a 60-day, 8 percent note for $9,000.

Accepted Answer

The answer of Compute the amount of interest owed on...

Question 9

The interest on a $5,000 face value, 3-month note bearing interest at 9 percent a year would be $1,350.
5,000 x .09 x 3/12 = $112.50.

Accepted Answer

A) True 
 B)False

Question 10

The amount of cash received at maturity for a $5,000, 90-day, 6% note receivable is $75.
Cash received = 5075 = Interest (5,000 x 90/360 x .06 = $75) + principal ($5000).

Accepted Answer

A) True 
 B)False

Question 11

A 20-day note dated October 15, would be due on November

Accepted Answer

A)  4. 
B)  5. 
C)  6. 
D)  7. 16 days in October + 4 days into November. 
A)  4. 
B)  5. 
C)  6. 
D)  7. 16 days in October + 4 days into November.

Question 12

The dollar amount shown on a note is called the principal, or ____________________ value.

Accepted Answer

The answer of The dollar amount shown on a note...

Question 13

Compute the maturity value of a 9-month, 9 percent note with a face value of $9,000. (round answer to 2 decimal places)

Accepted Answer

The answer of Compute the maturity value of a 9-month,...

Question 14

The Madison Company had the following transactions involving notes receivable during 2011. Record the transactions on page 8 of a general journal. Omit descriptions.

Accepted Answer

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

Question 15

On March 10, 2011, the Westwood Company accepted a 60-day, 9 percent note from Pete Houghton in settlement of his past-due account for $6,000. On April 9, Westwood Company discounted the note at the First National Bank. The bank charged a discount rate of 12 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. May 9, 2011; 2. $

Question 16

The maturity value of a 90-day note for $4,000 that bears interest at 10 percent a year is

Accepted Answer

A)  $4,400. 
B)  $4,100. 
C)  $4,000. 
D)  $3,900. 4,000 x 90/360 x .1 = 100; 4,000 + 100 = $4,100. 
A)  $4,400. 
B)  $4,100. 
C)  $4,000. 
D)  $3,900. 4,000 x 90/360 x .1 = 100; 4,000 + 100 = $4,100.

Question 17

Interest Expense usually appears on the income statement as a nonoperating expense.

Accepted Answer

A) True 
 B)False

Question 18

A firm purchased equipment for $12,000 on credit and issued a 120-day note bearing interest at 9 percent a year as evidence of the debt. To record this transaction, the accountant would debit

Accepted Answer

A)  Equipment for $12,000 and credit Accounts Payable for $12,000. 
B)  Equipment for $12,000 and credit Notes Payable for $12,000. 
C)  Equipment for $12,360, credit Interest Expense for $360, and credit Notes Payable for $12,000. 
D)  Equipment for $12,000, debit Interest Expense for $360, and credit Notes Payable for $12,360. 
A)  Equipment for $12,000 and credit Accounts Payable for $12,000. 
B)  Equipment for $12,000 and credit Notes Payable for $12,000. 
C)  Equipment for $12,360, credit Interest Expense for $360, and credit Notes Payable for $12,000. 
D)  Equipment for $12,000, debit Interest Expense for $360, and credit Notes Payable for $12,360.

Question 19

An ordinary check is one form of draft.

Accepted Answer

A) True 
 B)False

Question 20

The Martinez Company, had the following transactions involving notes payable during 2010. Record the transactions on page 11 of a general journal. Omit descriptions.

Accepted Answer

The answer of The Martinez Company, had the following transactions...

Compute the amount of interest owed on a 6-month, 9 percent note for $6,000.

Which of the following statements is not correct?

When a company issues a promissory note, the accountant records an entry that includes a credit to Note Payable for the

Find the due date of a 90-day note issued on June 6, 2010.

The Interest Expense account usually has a credit balance.

Notes payable due within one year are usually shown in the

To obtain cash on delivery, goods may be shipped with a sight draft attached to a(n) __________________.

Compute the amount of interest owed on a 60-day, 8 percent note for $9,000.

The interest on a $5,000 face value, 3-month note bearing interest at 9 percent a year would be $1,350. 5,000 x .09 x 3/12 = $112.50.

The amount of cash received at maturity for a $5,000, 90-day, 6% note receivable is $75. Cash received = 5075 = Interest (5,000 x 90/360 x .06 = $75) + principal ($5000).

A 20-day note dated October 15, would be due on November

The dollar amount shown on a note is called the principal, or ____________________ value.

Compute the maturity value of a 9-month, 9 percent note with a face value of $9,000. (round answer to 2 decimal places)

The Madison Company had the following transactions involving notes receivable during 2011. Record the transactions on page 8 of a general journal. Omit descriptions.

The maturity value of a 90-day note for $4,000 that bears interest at 10 percent a year is

Interest Expense usually appears on the income statement as a nonoperating expense.

A firm purchased equipment for $12,000 on credit and issued a 120-day note bearing interest at 9 percent a year as evidence of the debt. To record this transaction, the accountant would debit

An ordinary check is one form of draft.

The Martinez Company, had the following transactions involving notes payable during 2010. Record the transactions on page 11 of a general journal. Omit descriptions.

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

Filters

Exam 16: Notes Payable and Notes Receivable

Compute the amount of interest owed on a 6-month, 9 percent note for $6,000.

Which of the following statements is not correct?

When a company issues a promissory note, the accountant records an entry that includes a credit to Note Payable for the

Find the due date of a 90-day note issued on June 6, 2010.

The Interest Expense account usually has a credit balance.

Notes payable due within one year are usually shown in the

To obtain cash on delivery, goods may be shipped with a sight draft attached to a(n) __________________.

Compute the amount of interest owed on a 60-day, 8 percent note for $9,000.

The interest on a $5,000 face value, 3-month note bearing interest at 9 percent a year would be $1,350. 5,000 x .09 x 3/12 = $112.50.

The amount of cash received at maturity for a $5,000, 90-day, 6% note receivable is $75. Cash received = 5075 = Interest (5,000 x 90/360 x .06 = $75) + principal ($5000).

A 20-day note dated October 15, would be due on November

The dollar amount shown on a note is called the principal, or ____________________ value.

Compute the maturity value of a 9-month, 9 percent note with a face value of $9,000. (round answer to 2 decimal places)

The Madison Company had the following transactions involving notes receivable during 2011. Record the transactions on page 8 of a general journal. Omit descriptions.

The maturity value of a 90-day note for $4,000 that bears interest at 10 percent a year is

Interest Expense usually appears on the income statement as a nonoperating expense.

A firm purchased equipment for $12,000 on credit and issued a 120-day note bearing interest at 9 percent a year as evidence of the debt. To record this transaction, the accountant would debit

An ordinary check is one form of draft.

The Martinez Company, had the following transactions involving notes payable during 2010. Record the transactions on page 11 of a general journal. Omit descriptions.

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

Filters