Question : 71. Grayson Bank agrees to lend the Trust Company $100,000 January : 1251368

71. Grayson Bank agrees to lend the Trust Company $100,000 on January 1.  Trust Company signs a $100,000, 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       8,000
Cash                       92,000
     Notes Payable                  100,000

B. Cash                       100,000
     Notes Payable                  100,000

C. Cash                       108,000
    Interest Expense                    8,000
    Notes Payable                    108,000

D. Notes Payable         100,000
Interest Payable          6,000
     Cash                                 100,000
    Interest Expense                    6,000

72. The journal entry to record the conversion of an $550 accounts payable to a notes payable would be:
 
A. Cash                   550
   Notes Payable             550

B. Notes Receivable  550
    Notes Payable            550

C. Notes Payable       550
    Cash                           550

D. Accounts Payable  550
    Notes Payable             550

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, 2012, Garrett Company, a calendar-year company, issued $500,000 of notes payable, of which $100,000 is due on January 1 for each of the next five years. The proper balance sheet presentation on December 31, 2012, is 
A. Current Liabilities, $500,000.
B. Current Liabilities, $100,000; Long-term Debt, $400,000.
C. Long-term Debt, $500,000
D. Current Liabilities, $400,000; Long-term Debt, $100,000.

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.  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