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Exam 16: Notes Payable and Notes Receivable

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Question 1

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The Hernandez Company had the following transactions involving notes receivable during 2019. Record the transactions on page 6 of a general journal. Omit descriptions. July 1 Received a 3 month, 8 percent note for $9,000 from Lincoln Company, a customer whose account was overdue. October 1 The note issued by Lincoln Company was dishonored today.

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Question 2

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The due date of a 40-day note dated October 12, is

A) November 19.
B) November 20.
C) November 21.
D) November 22.

E) None of the above
F) A) and D)

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Question 3

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The amount of cash paid on the maturity date on a $9,000 face value, 60-day note bearing interest at 8 percent is-------- .

A firm purchased equipment for $16,000 on credit and issued a 120-day note bearing interest at 9 percent as evidence of the debt. The journal entry to record payment of the note at maturity is

The due date of a 120-day note dated October 9, is

Notes payable due within one year are shown in the

Interest Income is classified as a current asset.

The Interest Expense account normally has a debit balance.

On October 10, 2019, the Berkeley Company accepted a 60-day, 9 percent note from Devon Reed in settlement of his past-due account for $3,000. On November 9, Berkeley Company discounted the note at the Security Bank. The bank charged a discount rate of 12 percent. Answer the following questions. (round your answers to 2 decimal places) 1. What is the maturity date of the note? 2. What is the maturity value of the note? 3. How many days are in the discount period? 4. What is the amount of the discount? 5. What is the amount of the proceeds?

The maturity value of a 60-day note for $12,000 that bears interest at 8 percent is (Assume 360 days in a year.)

Explain when and why the Notes Receivable Discounted account is used.

The maturity value of a $12,000 face value, 180-day note bearing interest at 10 percent is (Assume 360 days in a year.)

Compute the maturity value of a 5-month, 8 percent note with a face value of $8,000. (round answer to 2 decimal places)

Even if an interest-bearing note receivable is dishonored, the interest income due on the note should be recorded.

The entry to record the collection of a note receivable on the maturity date includes a debit to Notes Receivable.

The journal entry to record the collection of a Note Receivable at maturity value for a 120-day, $36,000, 9 % note would include

The total that must be paid when a note becomes due is known as the

The maturity value of a 60-day note for $9,000 that bears interest at 6 percent is (Assume 360 days in a year.)

On July 5, 2019, the Cowens Company accepted a 90-day, 10 percent note from Rhonda Ballard in settlement of her past-due account for $5,000. On Aug. 4, the Cowens Company discounted the note at the Investment Capital Bank. The bank charged a discount rate of 6 percent. Answer the following questions. 1. What is the maturity date of the note? 2. What is the maturity value of the note? 3. How many days are in the discount period? 4. What is the amount of the discount? 5. What is the amount of the proceeds?

A dishonored note is converted to Accounts Receivable at its maturity value.