Face value of a note payable plus total interest is called: face value principal maturity value proceeds 2 Hatmaker Company signs a note payable for $3,500 at 9% for 45 days. How much interest (to the nearest cent) will the company owe using a 360-day year? $ 38.84 $354.38 $ 39.38 $315.00 3 Bingo Corp signed a promissory note of $1,000 for one of its vendors in exchange for supplies. $100 cash payment is due upon signing the note and the term is that the balance and interest are due in 90 days at 12% (assume 360 days). Bingo will record the note in the book at the inception of the term as Debit Accounts Receivable $1, 000; Credit Cash $100 and credit Notes Receivable $900 Debit Accounts Payable $1, 000; Credit Cash $100 and credit Notes Payable $900 Debit Supplies $1, 000; Credit Cash $100 and credit Notes Payable $900 None of the above 4 Archie’s had sales of $6,758. The state sales tax rate is 7%. All sales are cash. What amount will be credited to Sales revenue? $7,231.06 $6,758.00 $473.06 $458.00 5 A major difference between accounts payable and notes payable is that Accounts payable are classified as current assets but notes payable are not Notes payable are more formal than accounts payable Notes payable are long-term assets but accounts payable are current assets Notes payable charge interest but accounts payable do not 6 On June 20, 2013, ABC Services received $2,400 in advance from a customer for one month’s service. The journal entry to record the receipt of cash would be which of the following? Debit Cash $2,400 and credit Service revenue $2,400 Debit Unearned service revenue $2,400 and credit Service revenue $2,400 Debit Cash $2,400 and credit Unearned service revenue $2,400 Debit Unearned service revenue $2,400 and credit Cash $2,400 7 Carter Company records sales on account of $950,500. The company operates in a state that imposes a 5% sales tax. Which of the following would be the amount of the Sales tax payable to the state? $45,000 $50,500 $47,525 $55,000 8 Accounts payable is a(n) Contingent liability Estimated liability Accrued liability Known liability 1 All the following are true about an installment note for a borrower except Installment notes are a series of payments to a lender Installment notes are recorded by including a credit to cash Installment notes are recorded by including a credit to notes payable Installment notes are recorded by including a debit to cash 2 Accounts payable are Amounts owed to suppliers for products and/or services purchased on credit Paid within 30 days Estimated liabilities Long-term liabilities 4 The face amount of a promissory note is called the: time of the note discount of the note principal of the note interest rate of the note 6 The entry to accrue interest at year-end on a note payable would be debit Interest Expense, credit Cash debit Interest Expense, credit Notes Payable debit Interest Expense, credit Interest Payable 8 On June 20, 2013, ABC Services received $2,400 in advance from a customer for one month’s service. The journal entry to record the receipt of cash would be which of the following? Debit Cash $2,400 and credit Service revenue $2,400 Debit Cash $2,400 and credit Unearned service revenue $2,400 Debit Unearned service revenue $2,400 and credit Cash $2,400 Debit Unearned service revenue $2,400 and credit Service revenue $2,400 Lenient Auto signed a $45,000 8% 30-year installment note on November 1, 2013. The note requires semiannual payments of $750 plus interest on May 1 and November 1 of each year. How will Lenient Auto classify this loan on its December 31, 2013 Balance Sheet? Current Portion of Long-term debt, $0; Long-term debt, $45,000 Current Portion of Long-term debt, $45,000; Long-term debt, $0 Current Portion of Long-term debt, $750; Long-term debt, $44,250 Current Portion of Long-term debt, $1,500; Long-term debt, $43,500 4 Bingo Corp signed a promissory note of $1,000 for one of its vendors in exchange for supplies. $100 cas…
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