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Exam 16: Notes Payable and Notes Receivable

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Question 41

Multiple Choice

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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

A) 20.
B) 40.
C) 60.
D) 30.

E) B) and C)
F) A) and D)

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Question 42

Multiple Choice

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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 this transaction is

A) debit Equipment for $16,000 and credit Accounts Payable for $16,000.
B) debit Equipment for $16,480 and credit Notes Payable for $16,480.
C) debit Equipment for $16,000, and credit Notes Payable for $16,000.
D) Equipment for $16,000, debit Interest Expense for $1,440, and credit Notes Payable for
$17,440.

E) A) and B)
F) None of the above

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Question 43

Short Answer

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The amount of interest that will accumulate on an $8,000 face value, 30-day note bearing interest at 12 percent is--------- .

The dollar amount shown on an interest-bearing note is called the principal, or--------- value.

The interest on a $40,000 face value, 120-day note that bears interest at 8 percent (Rounded to the nearest dollar. Assume 360 days in a year.) is

On March 10, 2019, 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?

The interest on a $20,000 face value, 90-day note that bears interest at 9 percent is?

Compute the amount of interest owed on a 120-day, 8 percent note for $18,000.

The journal entry to record the issue a promissory note, includes a credit to Note Payable for the

A 3-month note payable is classified as a(n)-----------on the balance sheet.

A journal entry is recorded at the time a sight draft is issued.

The maturity value of a 120-day note for $18,000 that bears interest at 12 percent is

The maturity value of a $90,000 face value, 90-day note bearing interest at 9 percent is (Assume 360 days in a year.)

Interest Expense usually appears on the income statement as a non-operating expense.

The maturity value of a 90-day note for $4,000 that bears interest at 10 percent is (Assume 360 days in a year.)

The amount of cash received at maturity for a $5,000, 90-day, 6 percent note receivable is $75.

When a note receivable is discounted, the net proceeds are computed by subtracting the discount charges from the-------- of the note.

If a note is not paid at maturity, it is said to be--------- .

The maturity value of a 180-day note for $8,000 that bears interest at 10 percent is (Assume 360 days in a year.)

A ------------is a commercial draft that is payable during a specified period of time.