Question : 71. Grayson Bank agrees to lend the Trust Company $120,000 January : 1239268

71. Grayson Bank agrees to lend the Trust Company $120,000 on January 1.  Trust Company signs a $120,000, 8%, 9-month note. The entry made by Trust Company on January 1 to record the proceeds and issuance of the note is:
 
A. Interest Expense         9,600
Cash                       110,400
     Notes Payable                  120,000

B. Cash                       120,000
     Notes Payable                  120,000

C. Cash                       129,600
    Interest Expense                    9,600
    Notes Payable                    120,000

D. Notes Payable         120,000
Interest Payable          7,200
     Cash                                 120,000
    Interest Expense                    7,200

72. The journal entry to record the conversion of an $4,700 accounts payable to a notes payable would be:
 
A. Cash                   4,700
   Notes Payable             4,700

B. Notes Receivable  4,700
    Notes Payable            4,700

C. Notes Payable       4,700
    Cash                           4,700

D. Accounts Payable  4,700
    Notes Payable             4,700

73. Current liabilities are: 
A. due and receivable within one year.
B. due and to be paid out of current assets within one year.
C. due, but not payable for more than one year.
D. payable if a possible subsequent event occurs.

74. Which of the following would most likely be classified as a current liability? 
A. Two-year Notes Payable
B. Bonds Payable
C. Mortgage Payable
D. Unearned Rent

75. Assuming a 360-day year, when a $30,000, 90-day, 5% interest-bearing note payable matures, total payment will amount to: 
A. $31,500
B. $1,500
C. $30,375
D. $375

76. The current portion of long-term debt should 
A. be classified as a long-term liability.
B. not be separated from the long-term portion of debt.
C. be paid immediately.
D. be reclassified as a current liability.

77. On January 5, 2014, Garrett Company, a calendar-year company, issued $1,000,000 of notes payable, of which $200,000 is due on January 1 for each of the next five years. The proper balance sheet presentation on December 31, 2014, is 
A. Current Liabilities, $1,000,000.
B. Current Liabilities, $200,000; Long-term Debt, $800,000.
C. Long-term Debt, $1,000,000
D. Current Liabilities, $800,000; Long-term Debt, $200,000.

78. On October 30, Seba Salon, Inc. issued a 90-day note with a face amount of $60,000 to Reyes Products, Inc. for merchandise inventory.  Assuming a 360-day year, determine the proceeds of the note assuming the note is discounted at 8%. 
A. $55,200
B. $64,800
C. $58,800
D. $61,200

79. Proper payroll accounting methods are important for a business for all the reasons below except  
A. good employee morale requires timely and accurate payroll payments.
B. payroll is subject to various federal and state regulations.
C. to help a business with cash flow problems by delayed payments of payroll taxes to federal and state agencies.
D. payroll and related payroll taxes have a significant effect on the net income of most businesses.

80. The amount of federal income taxes withheld from an employee’s gross pay is recorded as a(n)  
A. payroll expense
B. contra account
C. asset
D. liability