Question 1

On October 1,2017,Parkin,Inc.made a loan to one of its customers.The customer signed a 9-month note for $150,000 at 14%.Calculate the maturity value of the note.(Round your answer to the nearest dollar. )

Accepted Answer

$150,000 + [($150,000 × 14%)× 9/12] = $165,750

Question 2

On July 1,2017,Collins Jewelers accepted a 3-month,15% note for $6,000 in settlement of an overdue account receivable.Prepare the journal entry to record the acceptance of the note.

Accepted Answer

The answer of On July 1,2017,Collins Jewelers accepted a 3-month,15%...

Question 3

On October 1,2017,Ealys Jewelers accepted a 4-month,11% note for $6,000 in settlement of an overdue account receivable.The accounting period ends on December 31.Calculate the accrued interest on the note at December 31,2017.(Round your answer to the nearest dollar. )

Accepted Answer

($6,000 × 11%)× 3/12 = $165

Question 4

On October 1,2017,Miller,Inc.made a loan to one of its customers.The customer signed a 4-month note for $130,000 at 12%.How much interest revenue did the company record in 2018 for this note? (Round your answer to the nearest dollar. )

Accepted Answer

($130,000 × 12%)× 1/12 = $1,300

Question 5

On October 1,2016,Lee's Electronic sold merchandise in exchange for a 4 month,$10,000 note receivable,with 6% interest.Interest revenue of $200 is earned in 2017.

Accepted Answer

2016 Interest Revenue: $10,000 × 0.06 × 3/12 = $150
2017 Interest Revenue: $10,000 × 0.06 × 1/12 = $50

Question 6

Calculate the interest on a 270-day,11% note for $36,000.(Use a 360-day year to compute interest.Round your answer to the nearest dollar. )

Accepted Answer

($36,000 × 11%)× 270 / 360 = $2,970

Question 7

The following selected transactions occurred during 2016 for Mitchell Movers.The company ends it accounting year on December 31.
 $$\begin{array} { | l | l | } 
\hline \text { Apr. 1 } & \text { Performed services on account for Ellison Rentals, } \$ 12,000 . \
\hline \text { Aug. 1 } & \begin{array} { l } 
\text { Received a } \$ 12,000,3 \text { month, } 9 \% \text { note from Ellison in } \
\text { satisfaction of its past-due account receivable. }
\end{array} \
\hline \text { Nov. 1 } & \text { Collected the Ellison note at maturity } \
\hline
\end{array}$$ Prepare the journal entries to record these transactions.

Accepted Answer

The answer of The following selected transactions occurred during 2016...

Question 8

On December 1,2017,Summit,Inc.sold machinery to a customer for $24,000.The customer could not pay at the time of sale but agreed to pay 11 months later and signed a 11-month note at 11% interest.How much interest revenue was earned during 2018? (Round your answer to the nearest dollar. )

Accepted Answer

($24,000 × 11%)× 10/12 = $2,200

Question 9

The maturity value of a note is the ________.

Accepted Answer

The maturity value of a note is the principal amount plus interest due at maturity. This means that when the note reaches its maturity date, the borrower must pay back the original principal amount plus any interest that has accrued over the life of the note. Therefore, option B is the correct choice.

Question 10

On October 1,2017,Zircon Jewelry Company accepted a 4-month,10% note for $2,400 in settlement of an overdue account receivable.Interest revenue was accrued through December 31,2017.Zircon receives the maturity value of the note at maturity.Prepare the journal entry to record the collection.

Accepted Answer

The answer of On October 1,2017,Zircon Jewelry Company accepted a...

Question 11

On December 1,2017,Parsons,Inc.sold machinery to a customer for $23,000.The customer could not pay at the time of sale,but agreed to pay 9 months later,and signed an 9-month note at 12% interest.How much interest revenue was earned during 2017? (Round your answer to the nearest dollar. )

Accepted Answer

($23,000 × 9%)× 1/12 = $230

Question 12

On April 1,2017,Banne Services received a 7-month note for $12,000 at 12%.Calculate the amount of interest due at maturity.(Round your answer to the nearest dollar. )

Accepted Answer

($12,000 × 12%)× 7/12 = $840

Question 13

On November 1,2017,Kelemen Jewelers accepted a 3-month,15% note for $6,000 in settlement of an overdue account receivable.The accounting period ends in December.Give the journal entry to record the accrued interest at the year end.

Accepted Answer

The answer of On November 1,2017,Kelemen Jewelers accepted a 3-month,15%...

Question 14

On December 1,2017,Going Places,Inc.sold machinery to a customer for $22,000.The customer could not pay at the time of sale but agreed to pay 10 months later and signed an 10-month note at 9% interest.What was the total amount of cash collected by Going Places on the maturity of the note? (Round your answer to the nearest dollar. )

Accepted Answer

$22,000 + [(22,000 × 9%)× 10/12] = $23,650

Question 15

If the maker of the note fails to pay on the maturity date,the note is said to be dishonored.

Accepted Answer

If the maker of a note fails to pay on the maturity date, the note is considered dishonored. This means that the holder of the note can take legal action to recover the amount owed.

Question 16

A six-month note receivable for $8,000 at 12%,dated September 1,2017,has accrued interest revenue of ________ as of December 31,2017.(Round your answer to the nearest dollar. )

Accepted Answer

($8,000 × 12%)× 4/12 = $320

Question 17

On December 1,2017,Falcon,Inc.sold machinery to a customer for $25,000.The customer could not pay at the time of sale but agreed to pay 11 months later and signed a 11-month note at 8% interest.How much interest revenue was earned for the entire term of the note? (Round your answer to the nearest dollar. )

Accepted Answer

($25,000 × 8%)× 11/12 = $1,833

Question 18

On October 1,2017,Hubbard,Inc.made a loan to one of its customers.The customer signed a 9-month note for $140,000 at 14%.Calculate the total interest earned on the note.(Round your answer to the nearest dollar. )

Accepted Answer

($140,000 × 14%)× 9/12 = $14,700

Question 19

On October 1,2017,Android,Inc.made a loan to one of its customers.The customer signed a 4-month note for $150,000 at 11%.How much interest revenue did the company record in the year 2017? (Round your answer to the nearest dollar. )

Accepted Answer

($150,000 × 11%)× 3/12 = $4,125

Question 20

On December 1,2017,Sheehan,Inc.sold machinery to a customer for $2,000.Sheehan regularly sells machinery.The customer could not pay at the time of sale but agreed to pay 9 months later and signed a 9-month note at 12% interest.Prepare the journal entry to record the revenue at the time of sale.Ignore the entry for cost of goods sold.

Accepted Answer

The answer of On December 1,2017,Sheehan,Inc.sold machinery to a customer...

Quiz 8: Receivables