Question 1

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 interest has been earned but not yet paid, so it is a liability for the borrower. Thus, the journal entry would involve debiting Interest Expense (since it is an expense for the borrower) and crediting Interest Payable (since it is a liability that will be paid in the future). Option A is incorrect because cash has not yet been paid or received. Option C is incorrect because Interest Payable is a liability, not an expense. Option D is incorrect because Notes Payable is not involved in the accrued interest journal entry.

Question 2

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

Accepted Answer

The total amount debited to the Cash account includes both the sales amount and the sales tax. The sales tax is 8.2% of $3,500, which is $287. Therefore, the total amount is $3,500 + $287 = $3,787.

Question 3

Jupiter Services sells a service plan for commercial computer maintenance.The price is $1,650 per year,paid in advance.On October 1,2013,the company 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 Jupiter Services sells a service plan for...

Question 4

NewAge Inc.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 NewAge Inc.made total cash sales in February...

Question 5

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 $125,000 by signing...

Question 6

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 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 $225,000 by signing...

Question 7

Barter Inc.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, we need to multiply the total amount of sales by the sales tax rate. 
Sales Tax = Total amount of sales * Sales tax rate
Sales Tax = $875,500 * 6% = $52,530
Therefore, the amount of sales tax payable to the state is $52,530. Option A is the correct choice.

Question 8

Jupiter Services sells a service plan for commercial computer maintenance.The price is $1,350 per year,paid in advance.On October 1,2015,the company 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 Jupiter Services sells a service plan for...

Question 9

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

Accepted Answer

By the end of April, 20 days of service have been provided, so 20/30 of the $4,800 should be recognized as revenue. This amounts to $3,200, which should be moved from Unearned Revenue to Service Revenue.

Question 10

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 taxes or any other deductions are taken out.

Question 11

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 12

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 merchandise inventory for...

Question 13

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 $100,000 plus interest 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 $500,000 by signing...

Question 14

Pluto Corp.had sold goods with a selling price of $8,421 for cash.The state sales tax rate is 8%.What amount will be credited to the Sales Revenue account?

Accepted Answer

The Sales Revenue account is credited with the selling price of the goods, which is $8,421. The sales tax is recorded separately and does not affect the sales revenue amount.

Question 15

Rosewood 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

The formula to calculate simple interest is:
Interest = Principal x Rate x Time
Here, the principal is $350,000, the rate is 6.5%, and the time is 6 months.
Converting the rate to a decimal form: 6.5/100 = 0.065

Using the formula:
Interest = $350,000 x 0.065 x (6/12)
Interest = $350,000 x 0.065 x 0.5
Interest = $11,375

Therefore, the total interest due on the note at maturity is $11,375. Thus, the best choice is C.

Question 16

At the maturity of a note payable,a borrower will pay ________.

Accepted Answer

At the maturity of a note payable, the borrower will pay both the principal amount and the interest amount accrued over the term of the note. Therefore, the best choice is A, which states that the borrower will pay the principal plus interest.

Question 17

Applied Foods Corp.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 Corp.had cash sales of $598,000...

Question 18

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

When a company receives cash in advance from a customer, it creates a liability called unearned revenue. Option D correctly records the increase in the liability account Unearned Revenue with a debit, and the increase in the asset account Cash with a credit. Therefore, the correct entry is to debit Cash $3,500 and to credit Unearned Revenue $3,500.

Question 19

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