Question 1

The maturity value of a 60-day note for $6,000 that bears interest at 6 percent a year is

Accepted Answer

A)   $6,060.
B)   $6,600.
C)   $6,000.
D)   5,940. 6,000 x 60/360 x .06 = 60; 6,000 + 60 = 6,060.E) None of the above
F) A) and D)

Question 2

The amount of interest that will accumulate on an $8,000 face value, 30-day note bearing interest at 12 percent is __________________.
8000 x 30/360 x .12 = 80.

Accepted Answer

The answer of The amount of interest that will accumulate...

Question 3

Find the due date of a 60-day note issued on January 18, 2010.

Accepted Answer

The answer of Find the due date of a 60-day...

Question 4

Compute the amount of interest owed on a 4-month, 6 percent note for $7,000.

Accepted Answer

The answer of Compute the amount of interest owed on...

Question 5

The amount of cash paid at maturity date on a $9,000 face value, 60-day note bearing interest at 6% is

Accepted Answer

A)   $9,720
B)   $9,090
C)   $9,000
D)   $7,200 9000 x 60/360 x .06 = 90; 9000 + 90 = 9090.E) A) and D)
F) None of the above

Question 6

A 2-month note dated January 1, 2010, will mature on the same date as a 60-day note dated January 1, 2010.

Accepted Answer

A) True 
 B)False

Question 7

The Notes Receivable Discounted account

Accepted Answer

A)   is shown as a deduction from Notes Receivable on the balance sheet.
B)   has a debit balance.
C)   is used to record the amounts due on dishonored notes.
D)   is used to record the amount of interest deducted by the bank when a note is discounted.E) A) and B)
F) B) and C)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Compute the maturity value of a 90-day, 10 percent note with a face value of $1,000.

Accepted Answer

The answer of Compute the maturity value of a 90-day,...

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The name given to the price charged for the use of money or credit is __________________.

Accepted Answer

The answer of The name given to the price charged...

Question 12

The maturity value of a 90-day note for $8,000 that bears interest at 10 percent a year is

Accepted Answer

A)   $7,800.
B)   $8,000.
C)   $8,200.
D)   $8,800. 8,000 x 90/360 x .1 = 200; 8,000 + 200 = $8,200.E) All of the above
F) C) and D)

Question 13

A(n) ____________________ is a form of commercial time draft that arises out of the sale of goods and has this fact noted on its face.

Accepted Answer

The answer of A(n) ____________________ is a form of commercial...

Question 14

A 60-day note dated April 1 was turned over to the bank for discounting on April 21. The number of days used in computing the dollar amount of the discount is

Accepted Answer

A)   20.
B)   40.
C)   60.
D)   30. 20 days had elapsed from April 1 to April 21.E) A) and B)
F) None of the above

Question 15

Compute the maturity value of a 30-day, 8 percent note with a face value of $6,000.

Accepted Answer

The answer of Compute the maturity value of a 30-day,...

Question 16

If the amount due on a note receivable is not collected at maturity,

Accepted Answer

A)   Allowance for Doubtful Accounts should immediately be debited.
B)   the note is said to be dishonored.
C)   the face value of the note should continue to be carried in the Notes Receivable account until all possible means of collecting the note have been exhausted.
D)   Uncollectible Accounts Expense should be debited.E) B) and D)
F) A) and D)

Question 17

A 90-day note issued May 10 matures on __________________.
21 days in May + 30 days in June + 31 days in July = 82 days; 90 - 82 = 8 days into August.

Accepted Answer

The answer of A 90-day note issued May 10 matures...

Question 18

The maturity value of a 120-day note for $12,000 that bears interest at 8 percent a year is

Accepted Answer

A)   $12,000.
B)   $11,680.
C)   $12,320.
D)   $12,120. 12,000 x 120/360 x .08 = 320; 12,000 + 320 = 12,320.E) A) and B)
F) A) and C)

Question 19

Since notes receivable are negotiable, internal control procedures must be devised to protect them against fraud and theft.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements is correct?

Accepted Answer

A)   To be considered a negotiable instrument, a promissory note must specify an interest rate.
B)   The amount shown on a note is called the face value.
C)   A company that issued a 6-month note payable would report its face value on the balance sheet as a long-term liability.
D)   A note payable must be payable at a specific time in the future.E) B) and C)
F) A) and C)

Exam 16: Notes Payable and Notes Receivable

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

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

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A 2-month note dated January 1, 2010, will mature on the same date as a 60-day note dated January 1, 2010.

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A 60-day note dated April 1 was turned over to the bank for discounting on April 21. The number of days used in computing the dollar amount of the discount is

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Since notes receivable are negotiable, internal control procedures must be devised to protect them against fraud and theft.

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The amount of cash paid at maturity date on a $9,000 face value, 60-day note bearing interest at 6% is

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Find the due date of a 60-day note issued on January 18, 2010.

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The Notes Receivable Discounted account

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Compute the maturity value of a 90-day, 10 percent note with a face value of $1,000.

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Which of the following statements is correct?

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The maturity value of a 120-day note for $12,000 that bears interest at 8 percent a year is

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Compute the amount of interest owed on a 4-month, 6 percent note for $7,000.

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Compute the maturity value of a 30-day, 8 percent note with a face value of $6,000.

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A(n) ____________________ is a form of commercial time draft that arises out of the sale of goods and has this fact noted on its face.

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The maturity value of a 90-day note for $8,000 that bears interest at 10 percent a year is

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The maturity value of a 60-day note for $6,000 that bears interest at 6 percent a year is

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If the amount due on a note receivable is not collected at maturity,

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The amount of interest that will accumulate on an $8,000 face value, 30-day note bearing interest at 12 percent is __________________. 8000 x 30/360 x .12 = 80.

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A 90-day note issued May 10 matures on __________________. 21 days in May + 30 days in June + 31 days in July = 82 days; 90 - 82 = 8 days into August.

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The name given to the price charged for the use of money or credit is __________________.

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