Question 1

On July 1, 2013, Ferrero Inc. purchased merchandise inventory for $500,000 by signing a note payable. The note is for 6 months and bears interest at a rate of 8%. Provide the journal entry at the end of December for payment of the note.

Accepted Answer

The answer of On July 1, 2013, Ferrero Inc. purchased...

Question 2

Celia's had sales of $8,421. The state sales tax rate is 8%. Sales are for cash. What amount will be credited to the Sales Revenue account?

Accepted Answer

The Sales Revenue account is credited with the actual sales amount, which is $8,421. The sales tax is recorded separately.

Question 3

On October 1, 2014, Ferrero Inc. borrowed $225,000 by signing a note payable. The note is for 9 months and bears interest at a rate of 8%. The company properly accrued interest at the end of 2014. Provide the journal entry at the end of June, 2015 when the note is settled.

Accepted Answer

The answer of On October 1, 2014, Ferrero Inc. borrowed...

Question 4

Which of the following accounts will be credited by the borrower when a promissory note is issued?

Accepted Answer

When a borrower issues a promissory note, it increases their liability because they are promising to pay a certain amount in the future. Therefore, the Note Payable account, which represents this liability, is credited.

Question 5

On July 1, 2013, Ferrero Inc. purchased merchandise inventory for $350,000 by signing a note payable. The note is for 6 months and bears interest at a rate of 8%. Provide the journal entry for this transaction, using a perpetual inventory system.

Accepted Answer

The answer of On July 1, 2013, Ferrero Inc. purchased...

Question 6

Gross pay is the total amount of salary, wages, commissions, and bonuses earned by an employee during a pay period, after taxes or any other deductions.

Accepted Answer

Gross pay is the total amount of salary, wages, commissions, and bonuses earned by an employee during a pay period before any taxes or deductions are taken out.

Question 7

On August 31, 2013, Peter Services received $3,500 in advance from a customer. Which of the following would be the journal entry to record the receipt of cash?

Accepted Answer

The receipt of cash in advance from a customer is recorded as a liability, as the service or product for which the customer paid has not yet been provided. Therefore, the journal entry would be to debit Cash for $3,500 and credit Unearned Revenue for $3,500. Option A is incorrect because it credits cash, which is not a liability account. Option B is incorrect because it credits Service Revenue, which is only recorded when services have been provided. Option C is incorrect because it credits both Unearned Revenue and Service Revenue, which does not reflect the fact that services have not yet been provided.

Question 8

The journal entry for accrued interest on a note payable by the borrower includes:

Accepted Answer

Accrued interest on a note payable means that the borrower owes interest on the note but it has not yet been paid. Therefore, the journal entry must include a debit to Interest Expense to recognize the expense and a credit to Interest Payable to recognize the liability. This option correctly reflects these entries.

Question 9

Ben Inc. recently signed a $350,000, six-month note on August 22, 2013. The interest rate is 6.5%. How much total interest will be due on the note at maturity?

Accepted Answer

First, we need to calculate the interest for one month:
$350,000 x 6.5% = $22,750
Then, we multiply by six months to find the total interest due at maturity:
$22,750 x 6 = $136,500
Therefore, the correct answer is C) $11,375.

Question 10

Gem Corp. had sales of $3,500. The state sales tax rate is 8.2%. Sales are for cash. What amount will be debited to the Cash account?

Accepted Answer

The state sales tax rate is 8.2% of the sales amount, which is $287. Therefore, the total amount due is $3,787. Since the sales were for cash, the total amount will be debited to the Cash account.

Question 11

Victoria Sales made total cash sales in February of $666,000, and they are subject to 7.5% sales tax. Please provide the summary entry to record sales revenues and sales tax payable.

Accepted Answer

The answer of Victoria Sales made total cash sales in...

Question 12

On December 31, 2014, Ferrero Inc. borrowed $500,000 by signing a note payable. The note is for 5 years and bears interest at the rate of 8%. The note is payable in 5 yearly installments of $125,219 due at the end of every year beginning on December 31, 2015. Which portion is classified as the long-term portion of Notes Payable at December 31, 2014?

Accepted Answer

The answer of On December 31, 2014, Ferrero Inc. borrowed...

Question 13

On April 10, 2013, Peter Services received $4,800 in advance from a customer for one month's service, to be provided April 10, 2013 to May 10, 2013. What would be the journal entry to adjust the accounts at the end of April?

Accepted Answer

At the end of April, Peter Services would have provided two-thirds (20 days out of 30 days) of the service for which they received $4,800 in advance. Therefore, they would have earned two-thirds of that amount, which is $3,200. To adjust the accounts, we need to debit Unearned Revenue (a liability account that represents the amount of revenue that has been collected in advance but hasn't been earned yet) and credit Service Revenue (an income account that represents the revenue earned by providing services) for $3,200. This recognizes the revenue that has been earned during April and reduces the liability for unearned revenue. Therefore, the correct journal entry is to debit Unearned Revenue $3,200 and credit Service Revenue $3,200.

Question 14

At the maturity of a note payable, a borrower will pay:

Accepted Answer

At the maturity of a note payable, the borrower is required to pay the full principal amount plus the accrued interest. This is the amount agreed upon at the time of borrowing the funds and is stated on the note payable document. Therefore, option A is the correct answer.

Question 15

Applied Foods had cash sales of $598,000 during the month of August. Sales taxes of 6.5% were collected on the sales. Prepare a compound journal entry to record the sales revenue and sales tax for the month.

Accepted Answer

The answer of Applied Foods had cash sales of $598,000...

Question 16

Jane Services sells a service plan for commercial computer maintenance. The price is $1,650 per year, paid in advance. On October 1, 2013, Jane sells a service plan to a new customer for cash. Provide the journal entry to record this transaction on October 1.

Accepted Answer

The answer of Jane Services sells a service plan for...

Question 17

Barter Company sold goods for $875,500 on account. The company operates in a state that imposes a 6% sales tax. Which of the following would be the amount of the sales tax payable to the state?

Accepted Answer

To calculate the sales tax payable to the state, we need to first calculate the amount of sales tax charged on the goods sold.

Amount of sales tax charged = 6% of $875,500 = $52,530

Therefore, the sales tax payable to the state is $52,530.

The correct answer is option A.

Question 18

Jane Services sells a service plan for commercial computer maintenance. The price is $1,350 per year, paid in advance. On October 1, 2015, Jane sells a service plan to a new customer for cash, and the plan covers the period October 1, 2015 to September 30, 2016. Provide the journal entry to record the adjustment needed on December 31, 2015.

Accepted Answer

The answer of Jane Services sells a service plan for...

Question 19

On September 1, 2013, Ferrero Inc. borrowed $125,000 by signing a note payable. The note is for 9 months and bears interest at a rate of 7.2%. Provide the journal entry to accrue interest expense at the end of 2013.

Accepted Answer

The answer of On September 1, 2013, Ferrero Inc. borrowed...

Question 20

On December 31, 2014, Ferrero Inc. borrowed $500,000 by signing a note payable. The note is for 5 years and bears interest at the rate of 8%. The note is payable in 5 yearly installments of $125,219 due at the end of every year beginning on December 31, 2015. What amount represents the current portion of Long-term Notes Payable at December 31, 2014?

Accepted Answer

The answer of On December 31, 2014, Ferrero Inc. borrowed...

Quiz 11: Current Liabilities and Payroll

On July 1, 2013, Ferrero Inc. purchased merchandise inventory for $500,000 by signing a note payable. The note is for 6 months and bears interest at a rate of 8%. Provide the journal entry at the end of December for payment of the note.

Celia's had sales of $8,421. The state sales tax rate is 8%. Sales are for cash. What amount will be credited to the Sales Revenue account?

On October 1, 2014, Ferrero Inc. borrowed $225,000 by signing a note payable. The note is for 9 months and bears interest at a rate of 8%. The company properly accrued interest at the end of 2014. Provide the journal entry at the end of June, 2015 when the note is settled.

Which of the following accounts will be credited by the borrower when a promissory note is issued?

On July 1, 2013, Ferrero Inc. purchased merchandise inventory for $350,000 by signing a note payable. The note is for 6 months and bears interest at a rate of 8%. Provide the journal entry for this transaction, using a perpetual inventory system.

Gross pay is the total amount of salary, wages, commissions, and bonuses earned by an employee during a pay period, after taxes or any other deductions.

On August 31, 2013, Peter Services received $3,500 in advance from a customer. Which of the following would be the journal entry to record the receipt of cash?

The journal entry for accrued interest on a note payable by the borrower includes:

Ben Inc. recently signed a $350,000, six-month note on August 22, 2013. The interest rate is 6.5%. How much total interest will be due on the note at maturity?

Gem Corp. had sales of $3,500. The state sales tax rate is 8.2%. Sales are for cash. What amount will be debited to the Cash account?

Victoria Sales made total cash sales in February of $666,000, and they are subject to 7.5% sales tax. Please provide the summary entry to record sales revenues and sales tax payable.

On April 10, 2013, Peter Services received $4,800 in advance from a customer for one month's service, to be provided April 10, 2013 to May 10, 2013. What would be the journal entry to adjust the accounts at the end of April?

At the maturity of a note payable, a borrower will pay:

Applied Foods had cash sales of $598,000 during the month of August. Sales taxes of 6.5% were collected on the sales. Prepare a compound journal entry to record the sales revenue and sales tax for the month.

Jane Services sells a service plan for commercial computer maintenance. The price is $1,650 per year, paid in advance. On October 1, 2013, Jane sells a service plan to a new customer for cash. Provide the journal entry to record this transaction on October 1.

Barter Company sold goods for $875,500 on account. The company operates in a state that imposes a 6% sales tax. Which of the following would be the amount of the sales tax payable to the state?

On September 1, 2013, Ferrero Inc. borrowed $125,000 by signing a note payable. The note is for 9 months and bears interest at a rate of 7.2%. Provide the journal entry to accrue interest expense at the end of 2013.