Question 1

Short-term notes receivable are reported at

Accepted Answer

Short-term notes receivable are reported at cash (net) realizable value, which is the face value of the note less any allowance for doubtful accounts or other adjustments necessary to accurately reflect the amount expected to be collected. This is because the primary purpose of reporting receivables at a lower value is to provide a more accurate representation of the amount the company will ultimately receive in cash. Reporting receivables at their face value or maturity value would overstate the company's assets and current revenue. Gross realizable value is not a commonly used accounting term.

Question 2

When a note is accepted to settle an open account, Notes Receivable is debited for the note's

Accepted Answer

When a note is accepted to settle an open account, Notes Receivable is debited for the face value of the note. This is because the face value represents the amount that the debtor promises to pay to the creditor on a future date. The net realizable value (A) may be lower than the face value if there is any doubt about the debtor's ability to pay or if the note is sold at a discount. The maturity value (B) is the face value plus any interest due at maturity. However, interest has not been earned yet when the note is accepted, so Notes Receivable is not credited for this amount. The face value plus interest (D) is also not correct for the same reason.

Question 3

The maturity value of a ¥500,000, 8%, 3-month note receivable is

Accepted Answer

The maturity value of a note receivable is calculated by adding the interest to the principal amount. The interest for a 3-month period on a ¥500,000 note at 8% annual interest is ¥500,000 * 8% * (3/12) = ¥10,000. Therefore, the maturity value is ¥500,000 + ¥10,000 = ¥510,000.

Question 4

On January 15, 2011, Raymond Company received a two-month, 9%, $5,000 note from William Pentel for the settlement of his open account.The entry by Raymond Company on January 15, 2011 would include a:

Accepted Answer

The entry by Raymond Company on January 15, 2011 would debit Notes Receivable for the amount of the note received, which is $5,000. The company is receiving a note from the customer, not paying the customer, so no credit to Accounts Receivable is recorded. The total amount of the note payable including interest is $5,000 + ($5,000 x 0.09 x 2/12) = $5,075, but this is not recorded as a debit to Notes Receivable at the time of issuance.

Question 5

The interest on a $5,000, 10%, 1-year note receivable is

Accepted Answer

To calculate interest on a note receivable, we use the following formula:

Interest = Principal x Rate x Time

In this case, the Principal is $5,000, the Rate is 10%, and the Time is 1 year.

Plugging in these values, we get:

Interest = $5,000 x 0.10 x 1

Interest = $500

Therefore, the interest on the note receivable is $500, and the best choice is option B.

Question 6

The interest on a $4,000, 6%, 60-day note receivable is

Accepted Answer

The answer of The interest on a $4,000, 6%, 60-day...

Question 7

The interest on a €5,000, 6%, 90-day note receivable is

Accepted Answer

The formula for interest on a note receivable is:
Interest = principal × rate × time
where principal is €5,000, rate is 6% (0.06 as a decimal), and time is 90/360 (since there are 360 days in a year and the note is for 90 days). Plugging in these values, we get:
Interest = €5,000 × 0.06 × (90/360)
Interest = €75
Therefore, the correct answer is C, €75.

Question 8

On July 17, 2011, Pear, Inc.writes a 60-day, 12%, $20,000 note to settle an open account with Solar
 Solutions. At what amount will the payee record the note receivable on its statement of financial position, and on what date will the note be recorded?

Accepted Answer

The note is recorded at face value or principal amount, which is $20,000, on the date it is issued, which is July 17, 2011. The interest is accrued over the course of the note's life and will be recorded separately as interest revenue.

Question 9

The two key parties to a promissory note are the

Accepted Answer

The maker of a promissory note is the person who promises to pay the money, and the payee is the recipient of the money promised. Therefore, the correct parties to a promissory note are the maker and the payee.

Question 10

On July 17, 2011, Pear, Inc.writes a 60-day, 12%, $20,000 note to settle an open account with Solar
 Solutions. Who will record a note receivable on its statement of financial position, and on what date will note be recorded?

Accepted Answer

Solar Solutions will record a note receivable on July 17, 2011, as they are the party receiving the note from Pear, Inc. to settle the account.

Question 11

Short-term notes receivables

Accepted Answer

The answer of Short-term notes receivables
...

Question 12

A note receivable is a negotiable instrument which

Accepted Answer

A note receivable can be transferred to another party by endorsement, making it a negotiable instrument. This means that the note can be bought and sold like any other asset, providing flexibility to the holder. Choices A and D are incorrect because a bad debts allowance is unrelated to a note receivable, and a bank is not the only entity that can collect on a note. Choice C is incorrect because a note receivable does not replace checks in a business firm.

Question 13

Notes receivable are recognized in the accounts at

Accepted Answer

Notes receivable are typically recognized at their face value, which is the amount stated on the note itself, not adjusted for interest or any other factors.

Question 14

A company that receives an interest bearing note receivable will

Accepted Answer

The face value is the amount written on the note as the principal amount. This is the amount that the borrower is obligated to pay back to the company, plus any interest that has accrued. Therefore, the company should debit Notes Receivable for the face value of the note.

Question 15

Parks Company receives a $10,000, 3-month, 8% promissory note from Todd Company in settlement of an open accounts receivable.What entry will Parks Company make upon receiving the note?

Accepted Answer

The answer of Parks Company receives a $10,000, 3-month, 8%...

Question 16

The maturity value of a $6,000, 9%, 60-day note receivable dated February 10th is

Accepted Answer

The formula for interest on a note receivable is:

Interest = Principal x Rate x Time

Where:
- Principal is the amount of the note ($6,000 in this case)
- Rate is the interest rate (9%)
- Time is the time period in terms of a fraction of a year (60 days divided by 365 days, which is approximately 0.1644)

So, to calculate the interest:

Interest = $6,000 x 0.09 x 0.1644 = $88.92

To find the maturity value, we add the interest to the principal:

Maturity value = $6,000 + $88.92 = $6,088.92

However, we need to round this to the nearest dollar (as specified in the question), which gives us the answer:

Maturity value = $6,090 (A)

Question 17

When calculating interest on a promissory note with the maturity date stated in terms of days, the

Accepted Answer

When using 360 days, each month is divided into 30 days. When using 365 days, each month is divided into its actual number of days. Therefore, using 360 days results in a slightly higher effective interest rate and thus the payee receives more interest.

Question 18

Which of the following is not true regarding a promissory note?

Accepted Answer

Promissory notes may be transferred to another party by endorsement, making the chosen answer not true.

Question 19

On January 15,2011 , Raymond Company received a two-month, 9\%, $ \$ 5,000 $ note from William Pentel for the settlement of his open account. The entry by Raymond Company on March 15,2011 if Pentel dishonors the note and collection is expected is:

Accepted Answer

The answer of On January 15,2011 , Raymond Company received...

Question 20

The face value of a note refers to the amount

Accepted Answer

The face value of a note refers to the amount that is identified on the formal instrument of credit. It is the basic amount borrowed or lent without including any interest or fees.

Quiz 8: Accounting for Receivables

Short-term notes receivable are reported at

When a note is accepted to settle an open account, Notes Receivable is debited for the note's

The maturity value of a ¥500,000, 8%, 3-month note receivable is

On January 15, 2011, Raymond Company received a two-month, 9%, $5,000 note from William Pentel for the settlement of his open account.The entry by Raymond Company on January 15, 2011 would include a:

The interest on a $5,000, 10%, 1-year note receivable is

The interest on a $4,000, 6%, 60-day note receivable is

The interest on a €5,000, 6%, 90-day note receivable is

On July 17, 2011, Pear, Inc.writes a 60-day, 12%, $20,000 note to settle an open account with Solar Solutions. At what amount will the payee record the note receivable on its statement of financial position, and on what date will the note be recorded?

The two key parties to a promissory note are the

On July 17, 2011, Pear, Inc.writes a 60-day, 12%, $20,000 note to settle an open account with Solar Solutions. Who will record a note receivable on its statement of financial position, and on what date will note be recorded?

Short-term notes receivables

A note receivable is a negotiable instrument which

Notes receivable are recognized in the accounts at

A company that receives an interest bearing note receivable will

Parks Company receives a $10,000, 3-month, 8% promissory note from Todd Company in settlement of an open accounts receivable.What entry will Parks Company make upon receiving the note?

The maturity value of a $6,000, 9%, 60-day note receivable dated February 10th is

When calculating interest on a promissory note with the maturity date stated in terms of days, the

Which of the following is not true regarding a promissory note?

On January 15,2011 , Raymond Company received a two-month, 9\%, $\$ 5,000$ note from William Pentel for the settlement of his open account. The entry by Raymond Company on March 15,2011 if Pentel dishonors the note and collection is expected is:

The face value of a note refers to the amount

Quiz 8: Accounting for Receivables

Short-term notes receivable are reported at

When a note is accepted to settle an open account, Notes Receivable is debited for the note's

The maturity value of a ¥500,000, 8%, 3-month note receivable is

On January 15, 2011, Raymond Company received a two-month, 9%, $5,000 note from William Pentel for the settlement of his open account.The entry by Raymond Company on January 15, 2011 would include a:

The interest on a $5,000, 10%, 1-year note receivable is

The interest on a $4,000, 6%, 60-day note receivable is

The interest on a €5,000, 6%, 90-day note receivable is

On July 17, 2011, Pear, Inc.writes a 60-day, 12%, $20,000 note to settle an open account with Solar Solutions. At what amount will the payee record the note receivable on its statement of financial position, and on what date will the note be recorded?

The two key parties to a promissory note are the

On July 17, 2011, Pear, Inc.writes a 60-day, 12%, $20,000 note to settle an open account with Solar Solutions. Who will record a note receivable on its statement of financial position, and on what date will note be recorded?

Short-term notes receivables

A note receivable is a negotiable instrument which

Notes receivable are recognized in the accounts at

A company that receives an interest bearing note receivable will

Parks Company receives a $10,000, 3-month, 8% promissory note from Todd Company in settlement of an open accounts receivable.What entry will Parks Company make upon receiving the note?

The maturity value of a $6,000, 9%, 60-day note receivable dated February 10th is

When calculating interest on a promissory note with the maturity date stated in terms of days, the

Which of the following is not true regarding a promissory note?

On January 15,2011 , Raymond Company received a two-month, 9\%, $5,000 \$ 5,000 $5,000 note from William Pentel for the settlement of his open account. The entry by Raymond Company on March 15,2011 if Pentel dishonors the note and collection is expected is:

The face value of a note refers to the amount

On January 15,2011 , Raymond Company received a two-month, 9\%, $\$ 5,000$ note from William Pentel for the settlement of his open account. The entry by Raymond Company on March 15,2011 if Pentel dishonors the note and collection is expected is: