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?

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