Question 1

Compute the amount of interest owed on a 4-month, 6 percent note for $7,000.

Accepted Answer

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

Question 2

Which of the following statements is correct?

Accepted Answer

A)  To be considered a negotiable instrument, a promissory note must specify an interest rate. 
B)  The amount shown on a note is called the face value. 
C)  A company that issued a 6-month note payable would report its face value on the balance sheet as a long-term liability. 
D)  A note payable must be payable at a specific time in the future.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A 90-day note issued May 10 matures on __________________.
21 days in May + 30 days in June + 31 days in July = 82 days; 90 - 82 = 8 days into August.

Accepted Answer

The answer of A 90-day note issued May 10 matures...

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Compute the maturity value of a 90-day, 10 percent note with a face value of $1,000.

Accepted Answer

The answer of Compute the maturity value of a 90-day,...

Question 7

Compute the maturity value of a 30-day, 8 percent note with a face value of $6,000.

Accepted Answer

The answer of Compute the maturity value of a 30-day,...

Question 8

The amount of cash paid at maturity date on a $9,000 face value, 60-day note bearing interest at 6% is

Accepted Answer

A)  $9,720 
B)  $9,090 
C)  $9,000 
D)  $7,200 9000 x 60/360 x .06 = 90; 9000 + 90 = 9090.

Question 9

The Notes Receivable Discounted account

Accepted Answer

A)  is shown as a deduction from Notes Receivable on the balance sheet. 
B)  has a debit balance. 
C)  is used to record the amounts due on dishonored notes. 
D)  is used to record the amount of interest deducted by the bank when a note is discounted.

Question 10

Find the due date of a 60-day note issued on January 18, 2010.

Accepted Answer

The answer of Find the due date of a 60-day...

Question 11

A 60-day note dated April 1 was turned over to the bank for discounting on April 21. The number of days used in computing the dollar amount of the discount is

Accepted Answer

A)  20. 
B)  40. 
C)  60. 
D)  30. 20 days had elapsed from April 1 to April 21.

Question 12

The name given to the price charged for the use of money or credit is __________________.

Accepted Answer

The answer of The name given to the price charged...

Question 13

A(n) ____________________ is a form of commercial time draft that arises out of the sale of goods and has this fact noted on its face.

Accepted Answer

The answer of A(n) ____________________ is a form of commercial...

Question 14

The maturity value of a 60-day note for $6,000 that bears interest at 6 percent a year is

Accepted Answer

A)  $6,060. 
B)  $6,600. 
C)  $6,000. 
D)  5,940. 6,000 x 60/360 x .06 = 60; 6,000 + 60 = 6,060.

Question 15

The maturity value of a 120-day note for $12,000 that bears interest at 8 percent a year is

Accepted Answer

A)  $12,000. 
B)  $11,680. 
C)  $12,320. 
D)  $12,120. 12,000 x 120/360 x .08 = 320; 12,000 + 320 = 12,320.

Question 16

Since notes receivable are negotiable, internal control procedures must be devised to protect them against fraud and theft.

Accepted Answer

A) True 
 B)False

Question 17

The maturity value of a 90-day note for $8,000 that bears interest at 10 percent a year is

Accepted Answer

A)  $7,800. 
B)  $8,000. 
C)  $8,200. 
D)  $8,800. 8,000 x 90/360 x .1 = 200; 8,000 + 200 = $8,200.

Question 18

The amount of interest that will accumulate on an $8,000 face value, 30-day note bearing interest at 12 percent is __________________.
8000 x 30/360 x .12 = 80.

Accepted Answer

The answer of The amount of interest that will accumulate...

Question 19

If the amount due on a note receivable is not collected at maturity,

Accepted Answer

A)  Allowance for Doubtful Accounts should immediately be debited. 
B)  the note is said to be dishonored. 
C)  the face value of the note should continue to be carried in the Notes Receivable account until all possible means of collecting the note have been exhausted. 
D)  Uncollectible Accounts Expense should be debited.

Question 20

A 2-month note dated January 1, 2010, will mature on the same date as a 60-day note dated January 1, 2010.

Accepted Answer

A) True 
 B)False

Exam 16: Notes Payable and Notes Receivable

Compute the amount of interest owed on a 4-month, 6 percent note for $7,000.

Which of the following statements is correct?

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

A 90-day note issued May 10 matures on __________________. 21 days in May + 30 days in June + 31 days in July = 82 days; 90 - 82 = 8 days into August.

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

Compute the maturity value of a 90-day, 10 percent note with a face value of $1,000.

Compute the maturity value of a 30-day, 8 percent note with a face value of $6,000.

The amount of cash paid at maturity date on a $9,000 face value, 60-day note bearing interest at 6% is

The Notes Receivable Discounted account

Find the due date of a 60-day note issued on January 18, 2010.

A 60-day note dated April 1 was turned over to the bank for discounting on April 21. The number of days used in computing the dollar amount of the discount is

The name given to the price charged for the use of money or credit is __________________.

A(n) ____________________ is a form of commercial time draft that arises out of the sale of goods and has this fact noted on its face.

The maturity value of a 60-day note for $6,000 that bears interest at 6 percent a year is

The maturity value of a 120-day note for $12,000 that bears interest at 8 percent a year is

Since notes receivable are negotiable, internal control procedures must be devised to protect them against fraud and theft.

The maturity value of a 90-day note for $8,000 that bears interest at 10 percent a year is

The amount of interest that will accumulate on an $8,000 face value, 30-day note bearing interest at 12 percent is __________________. 8000 x 30/360 x .12 = 80.

If the amount due on a note receivable is not collected at maturity,

A 2-month note dated January 1, 2010, will mature on the same date as a 60-day note dated January 1, 2010.