Question : 61. Metal CompanyMetal Company sold merchandise to Steel Corporation December 1, : 1224916

61. Metal Company
Metal Company sold merchandise to Steel Corporation on December 1, 2012, for $150,000, and accepted a promissory note for payment in the same amount. The note has a term of three months and an annual interest rate of 8%. Metal’s accounting period ends on December 31.

Refer to the data provided for Metal Company. What is the maturity date of the note? 
A. December 31, 2012
B. January 31, 2013
C. February 28, 2013
D. March 31, 2013

62. Metal Company
Metal Company sold merchandise to Steel Corporation on December 1, 2012, for $150,000, and accepted a promissory note for payment in the same amount. The note has a term of three months and an annual interest rate of 8%. Metal’s accounting period ends on December 31.

Refer to the data provided for Metal Company. What amount should Metal recognize as interest revenue on December 31, 2012? 
A. $      -0-
B. $  1,000
C. $12,000
D. $11,000

63. Metal Company
Metal Company sold merchandise to Steel Corporation on December 1, 2012, for $150,000, and accepted a promissory note for payment in the same amount. The note has a term of three months and an annual interest rate of 8%. Metal’s accounting period ends on December 31.

Refer to the data provided for Metal Company. What amount should Metal recognize as interest revenue on the maturity date of the note? 
A. $    -0-
B. $1,000
C. $2,000
D. $3,000

64. Peach Tree Farm
Peach Tree Farm received a promissory note from a customer on March 1, 2012. The principal amount of the note is $20,000; the terms are 3 months and 9% annual interest.

Refer to the information for Peach Tree Farm. What is the total amount of interest that Peach Tree Farm will receive when the note is collected? 
A. $   300
B. $   150
C. $   450
D. $1,800

65. Peach Tree Farm
Peach Tree Farm received a promissory note from a customer on March 1, 2012. The principal amount of the note is $20,000; the terms are 3 months and 9% annual interest.

Refer to the information for Peach Tree Farm. At the maturity date, the customer pays the amount due for the note and interest. What entry is required on the books of Peach Tree Farm on the maturity date assuming that none of the interest had already been recognized? 
A. Decrease cash and notes receivable by $20,000
B. Increase cash by $20,450, increase interest revenue by $450, and decrease notes receivable by $20,000
C. Increase cash by $20,450, increase notes receivable by $20,000, and increase interest revenue by $450
D. No entry is required; the customer pays the amount due to Peach Tree Farm.

66. Lubing Company
Lubing Company sold merchandise to Lewing Corporation. on December 1, 2012, for $100,000. Lubing accepted a promissory note from Lewing Corporation for $100,000. The note has a term of 6 months and an annual interest rate of 9%. Lubing’s accounting period ends on December 31, 2012.

Refer to the information provided for Lubing Company. What amount should Lubing recognize as interest revenue on December 31, 2012? 
A. $    -0-
B. $   750
C. $1,500
D. $9,000

67. Lubing Company
Lubing Company sold merchandise to Lewing Corporation. on December 1, 2012, for $100,000. Lubing accepted a promissory note from Lewing Corporation for $100,000. The note has a term of 6 months and an annual interest rate of 9%. Lubing’s accounting period ends on December 31, 2012.

Refer to the information provided for Lubing Company. What amount should Lubing recognize as interest revenue on the maturity date of the note? 
A. $    -0-
B. $4,500
C. $3,750
D. $9,000

68. Land Shoes
Land Shoes received a promissory note from a customer on July 1, 2012. The face value of the note is $45,000; the terms are 12 months and 10% annual interest.

Refer to the information provided for Land Shoes. How much interest revenue will Land Shoes recognize for the year ended December 31, 2012? 
A. $       0
B. $9,000
C. $2,250
D. $4,500

69. Land Shoes
Land Shoes received a promissory note from a customer on July 1, 2012. The face value of the note is $45,000; the terms are 12 months and 10% annual interest.

Refer to the information provided for Land Shoes. At the maturity date, the customer pays for the note and interest. Land Shoes made the proper adjustment at the end of December 2012 for interest. The effect of recognizing the transaction on the maturity date is: 
A. a decrease to cash.
B. a decrease to interest receivable.
C. an increase to interest receivable.
D. a decrease to notes receivable.

70. On March 1, 2012, Mack Corporation accepted cash of $10,000 and a six-month, $80,000 interest-bearing note from Gee, Inc., as settlement of an account receivable. Mack has a fiscal year-end of July 31st and Gee paid the principle and the interest on time.  Select the appropriate journal entry that reflects the acceptance of the note on March 1, 2012? 
A.        Cash                                        10,000
       Notes Receivable                             80,000            
              Accounts Receivable                       90,000           
B.        Notes Receivable                           90,000            
              Accounts Receivable                       90,000
C.        Accounts Receivable              90,000            
        Notes Receivable                       90,000
D.        Accounts Receivable              10,000
       Notes Receivable                           80,000            
              Cash                                                 90,000

71. Harper Company lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note. Harper Company prepares financial statements on March 31.  What adjusting entry Harper should make before the financial statements can be prepared? 
A. Cash                                                     200
           Interest Revenue                                          200
B. Interest Receivable                              800
           Interest Revenue                                          800
C. Interest Receivable                              200
           Interest Revenue                                          200
D. Note Receivable                             40,000
           Cash                                                        40,000

72. What should a company do to improve its accounts receivable turnover ratio? 
A. Lower its selling prices.
B. Increase its sales force.
C. Give customers credit terms of 2/10, n/30 rather than 1/10, n/30.
D. Reduce the number of employees working in the credit department.

73. What is the distinguishing characteristic between accounts receivable and notes receivable? 
A. Accounts receivable are usually current assets while notes receivable are usually long-term assets.
B. Accounts receivable require payment of interest while notes receivable does not have payment of interest.
C. Notes receivable result from credit sale transactions for merchandising companies, while accounts receivable result from credit sale transactions for service companies.
D. Notes receivable generally specify an interest rate and a maturity date at which any interest and principle must be repaid.