Question : 14.2   Learning Objective 14-2 1) For the payee, being given additional : 1171057

14.2   Learning Objective 14-2

1) For the payee, being given additional time to settle an account with issuance of a note results in a shift of:

A) assets from Notes Receivable to Accounts Receivable.

B) assets from Accounts Receivable to Notes Receivable.

C) liabilities from Notes Payable to Accounts Payable.

D) liabilities from Accounts Payable to Notes Payable.

2) When an interest-bearing note comes due and is uncollectible, the journal entry includes:

A) debiting Notes Receivable; crediting Accounts Receivable.

B) debiting Notes Receivable; crediting Accounts Receivable and Interest Revenue.

C) debiting Accounts Receivable; crediting Interest Revenue.

D) debiting Accounts Receivable; crediting Notes Receivable and Interest Revenue.

3) Martin Company needs additional time to pay its accounts payable to Boster Company. Martin makes a written promise to pay Boster the amount on a certain date. Martin records this transaction as follows:

A) debit Notes Payable; credit Accounts Payable.

B) debit Cash; credit Accounts Payable.

C) debit Accounts Payable; credit Notes Payable.

D) debit Notes Payable; credit Cash.

4) Brooke Company grants James Decorating additional time to pay its past due account. James makes a written promise to pay Brooke the amount on a certain date. Brooke Company records this transaction as follows:

A) debit Notes Receivable; credit Accounts Receivable.

B) debit Cash; credit Accounts Receivable.

C) debit Accounts Receivable; credit Notes Receivable.

D) debit Accounts Payable; credit Notes Payable.

5) Jeff Company issues a promissory note to David Company to get extended time on an account payable. Jeff Company records this transaction as follows:

A) debit Accounts Receivable; credit Notes Receivable.

B) debit Notes Receivable; credit Accounts Receivable.

C) debit Notes Payable; credit Accounts Payable.

D) debit Accounts Payable; credit Notes Payable.

6) Cory issued a note to his creditor in exchange for an account. Cory records the transaction as follows:

A) debit Notes Payable; credit Accounts Payable.

B) debit Notes Receivable; credit Accounts Receivable.

C) debit Accounts Payable; credit Notes Payable.

D) debit Accounts Receivable; credit Notes Payable.

7) If a company does not pay its note payable on the agreed upon date, the note:

A) is renewed automatically for the same period of time.

B) is discounted at a higher rate of interest.

C) is dishonored by the vendor.

D) is automatically placed in collection with an outside agency.

8) On November 10, Twister Rides issued a 12%, 60-day, $10,000 promissory note. Twister should record the payment of the note on the maturity day as:

A) debit Notes Payable $10,200; credit Cash $10,200.

B) debit Notes Payable $10,000; debit Interest Expense $200; credit Cash $10,200.

C) debit Notes Payable $10,000; debit Interest Payable $200; credit Cash $10,200.

D) debit Notes Payable $10,000; credit Cash $10,000.

9) Straight Company sold merchandise to Cross Company and received a promissory note from Cross. Straight should record the transaction as:

A) debit Notes Receivable and credit Sales for the principal amount of the note.

B) debit Notes Receivable and credit Sales for the maturity value of the note.

C) debit Accounts Receivable and credit Sales for the maturity amount of the note.

D) debit Accounts Receivable and credit Sales for the principal amount of the note.

10) Tricia’s Decor purchased merchandise from House Beautiful and issued a promissory note. Tricia should record the transaction as:

A) debit Purchases and credit Notes Payable for the principal amount of the note.

B) debit Purchases and credit Notes Payable for the maturity value of the note.

C) debit Purchases and credit Accounts Payable for the face amount of the note.

D) debit Purchases and credit Accounts Payable for the maturity value of the note.