Question 1

Accounts receivable are interest-bearing,while notes receivable are not.

Accepted Answer

This statement is false. Notes receivable can be interest-bearing or non-interest-bearing, just like accounts receivable. It depends on the terms and agreement between the borrower and lender.

Question 2

Acme,Inc.accepted a promissory note from NadirCo,who promised to pay Acme $5,000 plus 6% interest at the end of four months.When NadirCo pays the note,Acme will receive ________.

Accepted Answer

The interest on the note is calculated as follows: $5,000 * 6% * (4/12) = $100. Therefore, when NadirCo pays the note, Acme will receive the principal amount of $5,000 plus $100 interest, totaling $5,100.

Question 3

Ace Electronics accepted a promissory note from Fenstermaker,who promised to pay Ace $2,000 plus 6% interest at the end of six months.What is the amount of interest that will be paid at the end of the six-month period?

Accepted Answer

To find the amount of interest, we need to calculate 6% of $2,000, which is $120. The total amount that Fenstermaker will pay at the end of six months is $2,000 + $120 = $2,120. Therefore, the correct answer is (C) $60.

Question 4

Acme,Inc.accepted a promissory note from NadirCo,who promised to pay Acme $5,000 plus 6% interest at the end of four months.When NadirCo first gives Acme the note,NadirCo should record a ________.

Accepted Answer

NadirCo should record a note payable of $5,000 because it is the amount they promised to pay Acme, excluding interest that will accrue over time. Interest is not recorded upfront in the note payable.

Question 5

The amount of interest revenue recorded during a single month on a 6%,3-month note receivable will be the same as the interest revenue on a 6%,6-month note receivable.

Accepted Answer

The answer of The amount of interest revenue recorded during...

Question 6

The Magic Cow accepts MasterCard.A customer made a $10,000 purchase using MasterCard.MasterCard charges Magic Cow 4% of sales as a service fee.Prepare the entry to record the sale including account titles and amounts.

Accepted Answer

The answer of The Magic Cow accepts MasterCard.A customer made...

Question 7

Why are credit card sales important to businesses?

Accepted Answer

The answer of Why are credit card sales important to...

Question 8

Acme,Inc.accepted a promissory note from NadirCo,who promised to pay Acme $5,000 plus 6% interest at the end of four months.When Acme first accepts the note,it should record a ________.

Accepted Answer

Acme is the one receiving the promissory note, so they should record a note receivable of $5,000. Options A and C are incorrect because Acme is not the one paying the note. Option D is incorrect because it includes the interest that will only be accrued in four months.

Question 9

Ace Electronics accepted a promissory note from Fenstermaker,who promised to pay Ace $2,000 plus 6% interest at the end of six months.When Ace first accepts the note,it should record ________.

Accepted Answer

When Ace accepts the promissory note, they become the recipient of the payment, which makes it a note receivable. The interest is not recorded at this point as it has not yet been earned. Therefore, the correct choice is B.

Question 10

MasterCard charges Team Shirts 4% of sales.On June 15,Team Shirts sold $4,000 worth of
T-shirts on MasterCard accounts.Team Shirts paid a fee of $174.40 to MasterCard.

Accepted Answer

The fee should be $160.00 because 4% of $4,000 is $160 (0.04 * 4000 = 160).

Question 11

Acme,Inc.accepted a promissory note from NadirCo,who promised to pay Acme $5,000 plus 6% interest at the end of four months.What is the amount of interest that will be paid at the end of the four-month period?

Accepted Answer

The interest can be calculated using the formula: Interest = Principal x Rate x Time. Here, Principal = $5,000, Rate = 6% (or 0.06 as a decimal), and Time = 4/12 year (since there are 12 months in a year). So, Interest = $5,000 x 0.06 x (4/12) = $100.

Question 12

Fox Company accepts VISA from its customers.VISA charges Fox Company 6% of sales.
Part A: Show the effect of the following events on the accounting equation,including both account titles and amounts:
  Part B: Why would Fox Company accept VISA?

Accepted Answer

The answer of Fox Company accepts VISA from its customers.VISA...

Question 13

Acme,Inc.accepted a promissory note from NadirCo,who promised to pay Acme $5,000 plus 6% interest at the end of four months.When Acme first accepts the note,it should record Interest receivable of ________.

Accepted Answer

Interest receivable is initially $0 because interest is accrued over time, not at the moment the note is accepted.

Question 14

Ace Electronics accepted a promissory note from Fenstermaker,who promised to pay Ace $2,000 plus 6% interest at the end of six months.When Fenstermaker first gives Ace the note,Fenstermaker should record ________.

Accepted Answer

Fenstermaker, the issuer of the note, should record a note payable for the principal amount of $2,000 at the time the note is given, as interest will be calculated over the period of the note.

Question 15

Ace Electronics accepted a promissory note from Fenstermaker,who promised to pay Ace $2,000 plus 6% interest at the end of six months.The maker of the note is ________ and the payee is _________.

Accepted Answer

The maker of the promissory note is Fenstermaker, as they are the one who promised to pay the money back. The payee is Ace Electronics, as they are the one who will receive the payment.

Question 16

The Multiplex Mart accepts VISA.During March,$140,000 in credit card sales were made.VISA charges 3% of sales as its service fee.Prepare the entry to record the credit card sales.Include the account titles and amounts.

Accepted Answer

The answer of The Multiplex Mart accepts VISA.During March,$140,000 in...

Question 17

What is the effect of the adjusting entry for bad debts expense on the Balance sheet?

Accepted Answer

The adjusting entry for bad debts expense reduces the amount of accounts receivable, which is a current asset, thus reducing the total assets on the balance sheet.

Question 18

The adjusting entry to record bad debts expense using the allowance method usually decreases total assets.

Accepted Answer

The answer of The adjusting entry to record bad debts...

Question 19

The adjusting entry for bad debts expense affects __________.

Accepted Answer

The answer of The adjusting entry for bad debts expense...

Question 20

On July 1,2012,Homer,Inc.loaned a customer $10,000 on a 3-month,9% note.
Part A: Show the effect on the accounting equation of the July 31,2012 adjusting entry for interest.Include both account titles and amounts.

Part B: Put an X to indicate each financial statement that is affected by the adjusting entry to accrue interest.
  Part C: Would your answer in Part A be different if the note were a $10,000,6-MONTH,9% note,instead of a 3-month note?

Accepted Answer

The answer of On July 1,2012,Homer,Inc.loaned a customer $10,000 on...

Quiz 4: Payment for Goods and Services: Cash and Accounts Receivable