Question Details

What amount is the note payable recorded 



1.	Greeson Corp. signed a three-month, zero-interest-bearing note on November 1, 2014 for the purchase of $250,000 of inventory. The face value of the note was $253,900. Assuming Greeson used a “Discount on Note Payable” account to initially record the note and that the discount will be amortized equally over the 3-month period, the adjusting entry made at December 31, 2014 will include a
a.	debit to Discount on Note Payable for $1,300.
b.	debit to Interest Expense for $2,600.
c.	credit to Discount on Note Payable for $1,300.
d.	credit to Interest Expense for $2,600.

	2.	The effective interest on a 12-month, zero-interest-bearing note payable of $300,000, discounted at the bank at 7% is
a.	6.54%.
b.	7%.
c.	14.29%.
d.	7.53%.

	3.	On September 1, Horton purchased $13,300 of inventory items on credit with the terms 1/15, net 30, FOB destination. Freight charges were $280. Payment for the purchase was made on September 18. Assuming Horton uses the perpetual inventory system and the net method of accounting for purchase discounts, what amount is recorded as inventory from this purchase?
a.	$13,167.
b.	$13,447.
c.	$13,580.
d.	$13,300.

	4.	Slack Inc. borrowed $320,000 on April 1. The note requires interest at 12% and principal to be paid in one year. How much interest is recognized for the period from April 1 to December 31?
a.	$0.
b.	$38,400.
c.	$25,600.
d.	$28,800.

	5.	Craig borrowed $350,000 on October 1, 2014 and is required to pay $360,000 on March 1, 2015. What amount is the note payable recorded at on October 1, 2014 and how much interest is recognized from October 1 to December 31, 2014?
a.	$350,000 and $0.
b.	$350,000 and $6,000.
c.	$360,000 and $0.
d.	$350,000 and $10,000.




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