Question 1

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent).
-

Accepted Answer

The answer of For each of the following, identify in...

Question 2

Accrued Interest Expense adjusts for interest incurred during the period but has not been paid or recorded because payment is not yet due.

Accepted Answer

Accrued Interest Expense represents the interest expense that has been incurred (i.e., the cost of borrowing money) during a particular period but has not yet been paid or recorded in the financial statements because the payment is not due until a future date.

Question 3

Indicate the account(s) to be debited and credited to record the following transactions.
-A promissory note received in granting a time extension to a charge customer.
Debit ________ Credit ________

Accepted Answer

The answer of Indicate the account(s) to be debited and...

Question 4

An adjustment that must be made for the accrued interest on a note receivable would include a:

Accepted Answer

Accrued interest on a note receivable is recorded by debiting Interest Receivable to recognize the interest income that has been earned but not yet received.

Question 5

Delivery Plus discounts its own 120-day, 8%, $40,000 notes receivable. It records the proceeds as: (Use a 360-day year. Do not round any intermediate calculations. Round your final answer to the nearest dollar.)

Accepted Answer

The proceeds are calculated by discounting the note's face value of $40,000 at 8% for 120 days. The discount is $1,067, so the cash received is $38,933. The entry debits Cash for $38,933, debits Discounts on Notes Payable for $1,067, and credits Notes Payable for $40,000.

Question 6

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent).
-

Accepted Answer

The answer of For each of the following, identify in...

Question 7

Indicate the account(s) to be debited and credited to record the following transactions.
-Paying the principal plus accrued interest.
Debit ________ & ________ Credit ________
A)Cash
B) Notes receivable
C)Accounts receivable
D) Interest receivable
E)Notes payable
F) Accounts payable
G)Interest payable
H) Discount on notes payable
I) Interest expense
J) Interest income
K) Sales

Accepted Answer

The answer of Indicate the account(s) to be debited and...

Question 8

Indicate the account(s) to be debited and credited to record the following transactions.
-Recording an adjusting entry for interest on the books of the seller (holder of the note).
Debit ________ Credit ________

Accepted Answer

Interest receivable is debited because it represents the interest income earned but not yet received, increasing an asset account. Interest income is credited because it increases the seller's income for the interest earned on the note.

Question 9

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent).
-

Accepted Answer

The answer of For each of the following, identify in...

Question 10

Indicate the account(s) to be debited and credited to record the following transactions.
-Accrued interest on a note payable.
Debit ________ Credit ________
A)Cash
B) Notes receivable
C)Accounts receivable
D) Interest receivable
E)Notes payable
F) Accounts payable
G)Interest payable
H) Discount on notes payable
I) Interest expense
J) Interest income
K) Sales

Accepted Answer

The answer of Indicate the account(s) to be debited and...

Question 11

Johnson issues a $3,000, 5%, 100-day promissory note to Adam on November 1. What is the adjusting entry made by Johnson on December 31 to recognize the interest (using a 360-day year)? (Do not round any intermediate calculations. Round your final answer to the nearest cent.)

Accepted Answer

The interest for 60 days (November and December) on a $3,000 note at 5% annual interest using a 360-day year is calculated as follows: Interest = Principal × Rate × Time = $3,000 × 5% × (60/360) = $25.00. Therefore, the adjusting entry is to debit Interest Expense and credit Interest Payable for $25.00.

Question 12

The nominal interest rate on the note is more than the effective interest rate on a discounted note payable.

Accepted Answer

The effective interest rate on a discounted note payable is actually higher than the nominal interest rate because the discount reduces the amount of money received from the loan, but interest is still paid on the full face value of the note.

Question 13

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent).
-

Accepted Answer

The answer of For each of the following, identify in...

Question 14

The journal entry for accrued interest on a note receivable includes:

Accepted Answer

Accrued interest on a note receivable is recorded by crediting Interest Income to recognize the revenue earned but not yet received.

Question 15

An adjustment that must be made for the accrued interest on a note payable would include a:

Accepted Answer

Accrued interest on a note payable is an expense that has been incurred but not yet paid, so it requires a debit to Interest Expense to recognize the cost.

Question 16

When a commercial bank discounts a note on the date of issue, the interest is deducted when the note matures.

Accepted Answer

When a commercial bank discounts a note on the date of issue, the interest is deducted from the principal amount upfront, not when the note matures.

Question 17

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent).
-

Accepted Answer

The answer of For each of the following, identify in...

Question 18

Paying the principal on a note plus interest would:

Accepted Answer

The answer of Paying the principal on a note plus...

Question 19

For notes payable issued in one period and due in the next period, accrued interest payable must be recorded at the beginning of the next period.

Accepted Answer

Accrued interest payable for notes payable issued in one period and due in the next should be recorded at the end of the period in which the note was issued, not at the beginning of the next period. This is to recognize the interest expense incurred during the period, even though the payment will not be made until the next period.

Question 20

On November 6, an 8%, 90-day, $3,000 note was accepted by Carmen in exchange for merchandise. What entry does Carmen make on December 31 to recognize the interest? (Use a 360-day year. Do not round any intermediate calculations. Round your final answer to the nearest cent.)

Accepted Answer

Carmen needs to recognize the interest earned from November 6 to December 31. The interest for this period is calculated as $3,000 * 8% * (55/360) = $36.67. Therefore, she debits Interest Receivable and credits Interest Income for $36.67.

Quiz 14: Notes Receivable and Notes Payable

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent). -

Accrued Interest Expense adjusts for interest incurred during the period but has not been paid or recorded because payment is not yet due.

Indicate the account(s) to be debited and credited to record the following transactions. -A promissory note received in granting a time extension to a charge customer. Debit Credit

An adjustment that must be made for the accrued interest on a note receivable would include a:

Delivery Plus discounts its own 120-day, 8%, $40,000 notes receivable. It records the proceeds as: (Use a 360-day year. Do not round any intermediate calculations. Round your final answer to the nearest dollar.)

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent). -

Indicate the account(s) to be debited and credited to record the following transactions. -Recording an adjusting entry for interest on the books of the seller (holder of the note) . Debit Credit

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent). -

Johnson issues a $3,000, 5%, 100-day promissory note to Adam on November 1. What is the adjusting entry made by Johnson on December 31 to recognize the interest (using a 360-day year) ? (Do not round any intermediate calculations. Round your final answer to the nearest cent.)

The nominal interest rate on the note is more than the effective interest rate on a discounted note payable.

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent). -

The journal entry for accrued interest on a note receivable includes:

An adjustment that must be made for the accrued interest on a note payable would include a:

When a commercial bank discounts a note on the date of issue, the interest is deducted when the note matures.

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent). -

Paying the principal on a note plus interest would:

For notes payable issued in one period and due in the next period, accrued interest payable must be recorded at the beginning of the next period.

On November 6, an 8%, 90-day, $3,000 note was accepted by Carmen in exchange for merchandise. What entry does Carmen make on December 31 to recognize the interest? (Use a 360-day year. Do not round any intermediate calculations. Round your final answer to the nearest cent.)

Quiz 14: Notes Receivable and Notes Payable

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent). -

Accrued Interest Expense adjusts for interest incurred during the period but has not been paid or recorded because payment is not yet due.

Indicate the account(s) to be debited and credited to record the following transactions. -A promissory note received in granting a time extension to a charge customer. Debit ________ Credit ________

An adjustment that must be made for the accrued interest on a note receivable would include a:

Delivery Plus discounts its own 120-day, 8%, $40,000 notes receivable. It records the proceeds as: (Use a 360-day year. Do not round any intermediate calculations. Round your final answer to the nearest dollar.)

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent). -

Indicate the account(s) to be debited and credited to record the following transactions. -Recording an adjusting entry for interest on the books of the seller (holder of the note) . Debit ________ Credit ________

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent). -

Johnson issues a $3,000, 5%, 100-day promissory note to Adam on November 1. What is the adjusting entry made by Johnson on December 31 to recognize the interest (using a 360-day year) ? (Do not round any intermediate calculations. Round your final answer to the nearest cent.)

The nominal interest rate on the note is more than the effective interest rate on a discounted note payable.

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent). -

The journal entry for accrued interest on a note receivable includes:

An adjustment that must be made for the accrued interest on a note payable would include a:

When a commercial bank discounts a note on the date of issue, the interest is deducted when the note matures.

For each of the following, identify in Column 1 the category to which the account belongs, in Column 2 the normal balance for the account, in Column 3 the financial statement that the account in which the account balance is reported, and in Column 4 the account's nature (temporary/permanent). -

Paying the principal on a note plus interest would:

For notes payable issued in one period and due in the next period, accrued interest payable must be recorded at the beginning of the next period.

On November 6, an 8%, 90-day, $3,000 note was accepted by Carmen in exchange for merchandise. What entry does Carmen make on December 31 to recognize the interest? (Use a 360-day year. Do not round any intermediate calculations. Round your final answer to the nearest cent.)

Indicate the account(s) to be debited and credited to record the following transactions. -A promissory note received in granting a time extension to a charge customer. Debit Credit

Indicate the account(s) to be debited and credited to record the following transactions. -Recording an adjusting entry for interest on the books of the seller (holder of the note) . Debit Credit