What adjusting entry should be made when preparing financial statements for a four-month, 6% interest note?

  

Chapter test-7-9-hamilton.docx I did the test, but I just need someone to review and let me know which ones I got wrong. Maybe you can put a comment on the ones I got wrong and let me know the correct answer
Match each of the following terms associated with notes receivable with the
best description of that term.
The dollar amount listed on the promissory note.
A note that is not paid when it is due
The amount due when the note is paid off.
The party promising to pay a note
Answer 1
Face Amount
Answer 2
Term
Answer 3
Notes Receivable
Answer 4
Face Amount
The amount charged for using the money of
another party.
Answer 5
A formal written instrument that represents
amounts due from customers.
Answer 6
The stated rate charged for using the money of
another party
Answer 7
The time between the date a note is issued and
the due date of the note.
Answer 8
Maturity Value
Dishonored Note
Interest Rate
Interest
Question 2
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A $6,000, 60-day, 12% note recorded on November 21 is not paid by the
maker at maturity. The journal entry to recognize this event is
Select one:
a. debit Cash, $6,120; credit Notes Receivable, $6,120
b. debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060
c. debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000;
Credit Interest Receivable, $120
d. debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000;
Credit Interest Revenue, $120
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Harper Company lends Hewell Company ,000 on March 1, accepting a
four-month, 6% interest note. Harper Company prepares financial statements
on March 31. What adjusting entry should be made before the financial
statements can be prepared?
Select one:
a. Note Receivable
Cash
40,000
b. Interest Receivable
Interest Revenue
200
c. Interest Receivable
Interest Revenue
800
d. Cash
Interest Revenue
40,000
200
800
200
200
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If the direct write-off method of accounting for uncollectible receivables is
used, what general ledger account is credited to write off a customer’s
account as uncollectible?
Select one:
a. Uncollectible Accounts Expense
b. Accounts Receivable
c. Interest Expense
d. Allowance for Doubtful Accounts
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Interest on a note can be calculated without knowledge of the
Select one:
a. rate of interest
b. notes duration
c. principal amount
d. fair value of the note
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The journal entry to record a note received from a customer to replace an
account is
Select one:
a. debit Notes Receivable; credit Accounts Receivable
b. debit Accounts Receivable; credit Notes Receivable
c. debit Notes Receivable; credit Notes Payable
d. debit Cash; credit Notes Receivable
Question 7
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The Lowery Co. uses the direct write-off method of accounting for
uncollectible accounts receivable. Lowery has a customer whose accounts
receivable balance has been determined to likely be uncollectible. The entry
to write off this account would be which of the following?:
Select one:
a. debit Allowance for Doubtful Accounts; credit Accounts Receivable
b. debit Bad Debt Expense; credit Accounts Receivable
c. debit Bad Debt Expense; credit Allowance for Doubtful Accounts
d. debit Sales Returns and Allowance, credit Accounts Receivable
Question 8
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The number of days’ sales in receivables
Select one:
a. measures the number of times the receivables turn over each year
b. is an estimate of the length of time the receivables have been
outstanding
c. is not meaningful and therefore is not used
d. is Net Credit Sales divided by Average Receivables
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You have just received notice that a customer of yours with an Account
Receivable balance of $100 has gone bankrupt and will not make any future
payments. Assuming you use the allowance method, the entry you make is
to
Select one:
a. debit Allowance for Doubtful Accounts and credit Accounts Receivable.
b. debit Allowance for Doubtful Accounts and credit Bad Debt Expense
c. debit Bad Debt Expense and credit Accounts Receivable.
d. debit Bad Debt Expense and credit Allowance for Doubtful Accounts.
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You have just received notice that a customer of yours with an Account
Receivable balance of $100 has gone bankrupt and will not make any future
payments. Assuming you use the allowance method, the entry you make is
to
Select one:
a. debit Bad Debt Expense and credit Accounts Receivable.
b. debit Bad Debt Expense and credit Allowance for Doubtful Accounts.
c. debit Allowance for Doubtful Accounts and credit Bad Debt Expense
d. debit Allowance for Doubtful Accounts and credit Accounts Receivable.
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Match each item to a bank statement adjustment, a company books
adjustment, or either.
NSF check
Answer 1
either
Outstanding checks
Answer 2
bank statement adjustment
Deposit in transit
Answer 3
bank statement adjustment
Interest revenue
Answer 4
either
Bank charges
Answer 5
either
Note collected by the bank
Answer 6
bank statement adjustment
Error in recording a check
Answer 7
company books adjustment
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A bank reconciliation should be prepared periodically because
Select one:
a. the bank has not recorded all of its transactions
b. the company’s records and the bank’s records are in agreement
c. the bank must make sure that its records are correct
d. any differences between the company’s records and the bank’s records
should be determined, and any errors made by either party should be
discovered and corrected
Question 13
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A minimum cash balance required by a bank is called
Select one:
a. EFT
b. cash in bank
c. cash equivalent
d. compensating balance
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An element of internal control is
Select one:
a. subsidiary ledgers
b. risk assessment
c. journals
d. controlling accounts
Question 15
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Consider the cash account below.
Additional Information: cash disbursements were 80% of collections.
Cash
??
115,375
??
80,275
Beg. Balance
Collections
Disbursements
End Balance
How much was the Beginning Balance of the Cash Account?
Select one:
a. $57,200
b. $35,100
c. $92,300
d. $103,350
Question 16
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Entries are made to the Petty Cash account when
Select one:
a. establishing the fund.
b. replenishing the petty cash fund.
c. making payments out of the fund.
d. recording shortages in the fund.
Question 17
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Jamison Company developed the following reconciling information in
preparing its June bank reconciliation:
Cash balance per bank, 6/30
Note receivable collected by bank
Outstanding checks
Deposits-in-transit
Bank service charge
NSF check
$13,000
4,000
7,000
2,500
35
1,900
Using the above information, determine the cash balance per books (before
adjustments) for the Jamison Company.
Select one:
a. $6,435
b. $8,065
c. $15,065
d. $10,565
Question 18
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When a firm uses internal auditors, it is adhering to which one of the
following internal control elements?
Select one:
a. monitoring
b. risk assessment
c. separating responsibilities for related operations
d. proofs and security measures
Question
Complete
19
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Which of the following would be added to the balance per books on a bank
reconciliation?
Select one:
a. Notes collected by the bank
b. Outstanding checks
c. Service charges
d. Deposits in transit
Question 20
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Which one of the following would not cause a bank to debit a company’s
account?
Select one:
a. Wiring of funds to other locations
b. Checks marked NSF
c. Bank service charge
d. Collection of a note receivable
Question 21
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Classify each of the following costs associated with long-lived assets as one
of the following:
Purchase price of land purchased for new
business site
Answer 1
Costs of government permits required to
develop land for a new business location
Answer 2
Cost of insurance during the construction of
new office building
Answer 3
Freight costs paid on purchase of new
equipment
Answer 4
Costs to survey a new piece of land for a new
business location
Answer 5
Landscaping at new business location
Repairs made to used office equipment
Interest on money borrowed to finance
construction of new office building
Sales Taxes paid on new factory equipment
Fees paid to architect to design new office
building
Question 22
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Land
Land
Buildings
Machinery and Equipment
Land
Answer 6
Land Improvements
Answer 7
Machinery and Equipment
Answer 8
Buildings
Answer 9
Machinery and Equipment
Answer 10
Buildings
A building with an appraisal value of $154,000 is made available at an offer
price of $172,000. The purchaser acquires the property for $40,000 in cash,
a 90-day note payable for $45,000, and a mortgage amounting to
$75,000. The cost basis recorded in the buyer’s accounting records to
recognize this purchase is
Select one:
a. $154,000
b. $172,000
c. $160,000
d. $120,000
Question 23
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A used machine with a purchase price of $77,000, requiring an overhaul
costing $8,000, installation costs of $5,000, and special acquisition fees of
$3,000, would have a cost basis of
Select one:
a. $82,000
b. $93,000
c. $85,000
d. $90,000
Question 24
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Factors contributing to a decline in the usefulness of a fixed asset may be
divided into the following two categories
Select one:
a. salvage and functional
b. physical and functional
c. functional and residual
d. residual and salvage
Question 25
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Land acquired so it can be resold in the future is listed in the balance sheet
as a
Select one:
a. intangible asset
b. investment
c. current asset
d. fixed asset
Question 26
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On June 1, 2014, Aaron Company purchased equipment at a cost of
$120,000 that has a depreciable cost of $90,000 and an estimated useful life
of 3 years and 30,000 hours.
Using straight line depreciation, calculate depreciation expense for the first
year.
Select one:
a. $40,000
b. $30,000
c. $12,500
d. $17,500
Question 27
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The depreciation method that does not use residual value in calculating the
first year’s depreciation expense is
Select one:
a. straight-line
b. double-declining-balance
c. units-of-production
d. none of the above
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When the amount of use of a fixed asset varies from year to year, the
method of determining depreciation expense that best matches allocation of
cost with revenue is
Select one:
a. units-of-production
b. declining-balance
c. MACRS
d. straight-line
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Which of the following is true?
Select one:
a. If using the units-of-production method, it is possible to depreciate more
than the depreciable cost.
b. Regardless of the depreciation method, the amount of total depreciation
expense during the life of the asset will be the same.
c. If using the double-declining-balance the total amount of depreciation
expense during the life of the asset will be the highest.
d. If using the straight line method, the amount of depreciation expense
during the first year is higher than that of the double-declining-balance.
Question 30
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Xtra Company purchased goodwill from Argus for $96,000. Argus had
developed the goodwill over 12 years. How much would Xtra amortize the
goodwill for its first year?
Select one:
a. Goodwill is not amortized.
b. $ 8,000
c. $7,000
d. Not enough information.

Introduction:
The handling of notes receivable is an essential aspect of running a business. It involves recording the promissory notes issued by customers who owe you money in exchange for goods or services. Managing notes receivable requires understanding several concepts, such as interest rate, maturity value, and dishonored notes.

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Description:
The following material includes a chapter test that covers essential topics regarding notes receivable. The test presents several questions that challenge one’s understanding of terms associated with notes receivable, the direct write-off method of accounting for uncollectible receivables, and calculating interest on a note. The test also includes scenarios that require the determination of the correct journal entry and adjusting entry for given transactions. The questions aim to help you identify areas of strength and weakness in your knowledge of notes receivable, and identify what to focus on further to enhance your expertise in this field.

Objectives: To test the understanding of the concept of notes receivable and the related terminologies.

Learning Outcomes: After taking this test, the learner will be able to identify the different terms associated with notes receivable, explain the process of recognizing uncollected notes, and choose the correct accounting treatment for different scenarios.

Chapter Test: Notes Receivable

Question 1: Match each of the following terms with the best description of that term.

– Face Amount
– Term
– Notes Receivable
– Maturity Value
– Interest Rate
– Dishonored Note

Question 2: Identify the correct journal entry to recognize an uncollected note.

Question 3: Determine the adjusting entry that should be made before the financial statements can be prepared.

Question 4: Identify the general ledger account that is credited to write off a customer’s account as uncollectible using the direct write-off method.

Question 5: Determine the statement that is true regarding the calculation of interest on a note.

Question 6: Identify the correct journal entry to record a note received from a customer to replace an account.

Question 7: Explain how Lowery Co. accounts for uncollectible accounts receivable using the direct write-off method.

Solution 1:
Matching correct terms with their descriptions:
1. Face Amount: The dollar amount listed on the promissory note.
2. Dishonored Note: A note that is not paid when it is due.
3. Maturity Value: The amount due when the note is paid off.
4. Maker: The party promising to pay a note.
5. Interest Rate: The amount charged for using the money of another party.
6. Notes Receivable: A formal written instrument that represents amounts due from customers.
7. Interest Revenue: The stated rate charged for using the money of another party.
8. Term: The time between the date a note is issued and the due date of the note.

Solution 2:
Answering the given questions:
Question 2: The correct journal entry to recognize the non-payment of a $6,000, 60-day, 12% note recorded on November 21 is (d) debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; Credit Interest Revenue, $120.
Question 3: The adjusting entry that should be made before preparing financial statements by Harper Company, who lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note, is (c) Interest Receivable Interest Revenue, $800.
Question 4: If the direct write-off method of accounting for uncollectible receivables is used, the general ledger account that is credited to write off a customer’s account as uncollectible is (b) Accounts Receivable.
Question 5: Interest on a note can be calculated without knowledge of the (d) fair value of the note.
Question 6: The journal entry to record a note received from a customer to replace an account is (a) debit Notes Receivable; credit Accounts Receivable.
Question 7: The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable.

Suggested Resources/Books:
1) Financial Accounting: Tools for Business Decision Making by Paul D. Kimmel, Jerry J. Weygandt, and Donald E. Kieso
2) Accounting Principles, 13th Edition by Jerry J. Weygandt, Paul D. Kimmel, and Donald E. Kieso
3) Managerial Accounting: Tools for Business Decision Making by Jerry J. Weygandt, Paul D. Kimmel, and Donald E. Kieso
4) Accounting Made Simple: Accounting Explained in 100 Pages or Less by Mike Piper

Similar asked questions:
1) What is the difference between notes receivable and accounts receivable?
2) What adjusting entry should be made when a note receivable goes bad?
3) Can you please explain the direct write-off method of accounting for uncollectible accounts receivable?
4) What is the maturity value of a note?
5) How is interest on a note calculated?Chapter test-7-9-hamilton.docx I did the test, but I just need someone to review and let me know which ones I got wrong. Maybe you can put a comment on the ones I got wrong and let me know the correct answer
Match each of the following terms associated with notes receivable with the
best description of that term.
The dollar amount listed on the promissory note.
A note that is not paid when it is due
The amount due when the note is paid off.
The party promising to pay a note
Answer 1
Face Amount
Answer 2
Term
Answer 3
Notes Receivable
Answer 4
Face Amount
The amount charged for using the money of
another party.
Answer 5
A formal written instrument that represents
amounts due from customers.
Answer 6
The stated rate charged for using the money of
another party
Answer 7
The time between the date a note is issued and
the due date of the note.
Answer 8
Maturity Value
Dishonored Note
Interest Rate
Interest
Question 2
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A $6,000, 60-day, 12% note recorded on November 21 is not paid by the
maker at maturity. The journal entry to recognize this event is
Select one:
a. debit Cash, $6,120; credit Notes Receivable, $6,120
b. debit Notes Receivable, $6,060; credit Accounts Receivable, $6,060
c. debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000;
Credit Interest Receivable, $120
d. debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000;
Credit Interest Revenue, $120
Question
3
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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 should be made before the financial
statements can be prepared?
Select one:
a. Note Receivable
Cash
40,000
b. Interest Receivable
Interest Revenue
200
c. Interest Receivable
Interest Revenue
800
d. Cash
Interest Revenue
40,000
200
800
200
200
Question 4
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If the direct write-off method of accounting for uncollectible receivables is
used, what general ledger account is credited to write off a customer’s
account as uncollectible?
Select one:
a. Uncollectible Accounts Expense
b. Accounts Receivable
c. Interest Expense
d. Allowance for Doubtful Accounts
Question 5
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Interest on a note can be calculated without knowledge of the
Select one:
a. rate of interest
b. notes duration
c. principal amount
d. fair value of the note
Question 6
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The journal entry to record a note received from a customer to replace an
account is
Select one:
a. debit Notes Receivable; credit Accounts Receivable
b. debit Accounts Receivable; credit Notes Receivable
c. debit Notes Receivable; credit Notes Payable
d. debit Cash; credit Notes Receivable
Question 7
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The Lowery Co. uses the direct write-off method of accounting for
uncollectible accounts receivable. Lowery has a customer whose accounts
receivable balance has been determined to likely be uncollectible. The entry
to write off this account would be which of the following?:
Select one:
a. debit Allowance for Doubtful Accounts; credit Accounts Receivable
b. debit Bad Debt Expense; credit Accounts Receivable
c. debit Bad Debt Expense; credit Allowance for Doubtful Accounts
d. debit Sales Returns and Allowance, credit Accounts Receivable
Question 8
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The number of days’ sales in receivables
Select one:
a. measures the number of times the receivables turn over each year
b. is an estimate of the length of time the receivables have been
outstanding
c. is not meaningful and therefore is not used
d. is Net Credit Sales divided by Average Receivables
Question 9
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You have just received notice that a customer of yours with an Account
Receivable balance of $100 has gone bankrupt and will not make any future
payments. Assuming you use the allowance method, the entry you make is
to
Select one:
a. debit Allowance for Doubtful Accounts and credit Accounts Receivable.
b. debit Allowance for Doubtful Accounts and credit Bad Debt Expense
c. debit Bad Debt Expense and credit Accounts Receivable.
d. debit Bad Debt Expense and credit Allowance for Doubtful Accounts.
Question 10
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You have just received notice that a customer of yours with an Account
Receivable balance of $100 has gone bankrupt and will not make any future
payments. Assuming you use the allowance method, the entry you make is
to
Select one:
a. debit Bad Debt Expense and credit Accounts Receivable.
b. debit Bad Debt Expense and credit Allowance for Doubtful Accounts.
c. debit Allowance for Doubtful Accounts and credit Bad Debt Expense
d. debit Allowance for Doubtful Accounts and credit Accounts Receivable.
Question 11
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Match each item to a bank statement adjustment, a company books
adjustment, or either.
NSF check
Answer 1
either
Outstanding checks
Answer 2
bank statement adjustment
Deposit in transit
Answer 3
bank statement adjustment
Interest revenue
Answer 4
either
Bank charges
Answer 5
either
Note collected by the bank
Answer 6
bank statement adjustment
Error in recording a check
Answer 7
company books adjustment
Question 12
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A bank reconciliation should be prepared periodically because
Select one:
a. the bank has not recorded all of its transactions
b. the company’s records and the bank’s records are in agreement
c. the bank must make sure that its records are correct
d. any differences between the company’s records and the bank’s records
should be determined, and any errors made by either party should be
discovered and corrected
Question 13
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A minimum cash balance required by a bank is called
Select one:
a. EFT
b. cash in bank
c. cash equivalent
d. compensating balance
Question 14
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An element of internal control is
Select one:
a. subsidiary ledgers
b. risk assessment
c. journals
d. controlling accounts
Question 15
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Consider the cash account below.
Additional Information: cash disbursements were 80% of collections.
Cash
??
115,375
??
80,275
Beg. Balance
Collections
Disbursements
End Balance
How much was the Beginning Balance of the Cash Account?
Select one:
a. $57,200
b. $35,100
c. $92,300
d. $103,350
Question 16
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Entries are made to the Petty Cash account when
Select one:
a. establishing the fund.
b. replenishing the petty cash fund.
c. making payments out of the fund.
d. recording shortages in the fund.
Question 17
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Jamison Company developed the following reconciling information in
preparing its June bank reconciliation:
Cash balance per bank, 6/30
Note receivable collected by bank
Outstanding checks
Deposits-in-transit
Bank service charge
NSF check
$13,000
4,000
7,000
2,500
35
1,900
Using the above information, determine the cash balance per books (before
adjustments) for the Jamison Company.
Select one:
a. $6,435
b. $8,065
c. $15,065
d. $10,565
Question 18
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When a firm uses internal auditors, it is adhering to which one of the
following internal control elements?
Select one:
a. monitoring
b. risk assessment
c. separating responsibilities for related operations
d. proofs and security measures
Question
Complete
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Which of the following would be added to the balance per books on a bank
reconciliation?
Select one:
a. Notes collected by the bank
b. Outstanding checks
c. Service charges
d. Deposits in transit
Question 20
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Which one of the following would not cause a bank to debit a company’s
account?
Select one:
a. Wiring of funds to other locations
b. Checks marked NSF
c. Bank service charge
d. Collection of a note receivable
Question 21
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Classify each of the following costs associated with long-lived assets as one
of the following:
Purchase price of land purchased for new
business site
Answer 1
Costs of government permits required to
develop land for a new business location
Answer 2
Cost of insurance during the construction of
new office building
Answer 3
Freight costs paid on purchase of new
equipment
Answer 4
Costs to survey a new piece of land for a new
business location
Answer 5
Landscaping at new business location
Repairs made to used office equipment
Interest on money borrowed to finance
construction of new office building
Sales Taxes paid on new factory equipment
Fees paid to architect to design new office
building
Question 22
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Land
Land
Buildings
Machinery and Equipment
Land
Answer 6
Land Improvements
Answer 7
Machinery and Equipment
Answer 8
Buildings
Answer 9
Machinery and Equipment
Answer 10
Buildings
A building with an appraisal value of $154,000 is made available at an offer
price of $172,000. The purchaser acquires the property for $40,000 in cash,
a 90-day note payable for $45,000, and a mortgage amounting to
$75,000. The cost basis recorded in the buyer’s accounting records to
recognize this purchase is
Select one:
a. $154,000
b. $172,000
c. $160,000
d. $120,000
Question 23
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A used machine with a purchase price of $77,000, requiring an overhaul
costing $8,000, installation costs of $5,000, and special acquisition fees of
$3,000, would have a cost basis of
Select one:
a. $82,000
b. $93,000
c. $85,000
d. $90,000
Question 24
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Factors contributing to a decline in the usefulness of a fixed asset may be
divided into the following two categories
Select one:
a. salvage and functional
b. physical and functional
c. functional and residual
d. residual and salvage
Question 25
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Land acquired so it can be resold in the future is listed in the balance sheet
as a
Select one:
a. intangible asset
b. investment
c. current asset
d. fixed asset
Question 26
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On June 1, 2014, Aaron Company purchased equipment at a cost of
$120,000 that has a depreciable cost of $90,000 and an estimated useful life
of 3 years and 30,000 hours.
Using straight line depreciation, calculate depreciation expense for the first
year.
Select one:
a. $40,000
b. $30,000
c. $12,500
d. $17,500
Question 27
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The depreciation method that does not use residual value in calculating the
first year’s depreciation expense is
Select one:
a. straight-line
b. double-declining-balance
c. units-of-production
d. none of the above
Question 28
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When the amount of use of a fixed asset varies from year to year, the
method of determining depreciation expense that best matches allocation of
cost with revenue is
Select one:
a. units-of-production
b. declining-balance
c. MACRS
d. straight-line
Question 29
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Which of the following is true?
Select one:
a. If using the units-of-production method, it is possible to depreciate more
than the depreciable cost.
b. Regardless of the depreciation method, the amount of total depreciation
expense during the life of the asset will be the same.
c. If using the double-declining-balance the total amount of depreciation
expense during the life of the asset will be the highest.
d. If using the straight line method, the amount of depreciation expense
during the first year is higher than that of the double-declining-balance.
Question 30
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Xtra Company purchased goodwill from Argus for $96,000. Argus had
developed the goodwill over 12 years. How much would Xtra amortize the
goodwill for its first year?
Select one:
a. Goodwill is not amortized.
b. $ 8,000
c. $7,000
d. Not enough information.

Introduction:
The handling of notes receivable is an essential aspect of running a business. It involves recording the promissory notes issued by customers who owe you money in exchange for goods or services. Managing notes receivable requires understanding several concepts, such as interest rate, maturity value, and dishonored notes.

Description:
The following material includes a chapter test that covers essential topics regarding notes receivable. The test presents several questions that challenge one’s understanding of terms associated with notes receivable, the direct write-off method of accounting for uncollectible receivables, and calculating interest on a note. The test also includes scenarios that require the determination of the correct journal entry and adjusting entry for given transactions. The questions aim to help you identify areas of strength and weakness in your knowledge of notes receivable, and identify what to focus on further to enhance your expertise in this field.

Objectives: To test the understanding of the concept of notes receivable and the related terminologies.

Learning Outcomes: After taking this test, the learner will be able to identify the different terms associated with notes receivable, explain the process of recognizing uncollected notes, and choose the correct accounting treatment for different scenarios.

Chapter Test: Notes Receivable

Question 1: Match each of the following terms with the best description of that term.

– Face Amount
– Term
– Notes Receivable
– Maturity Value
– Interest Rate
– Dishonored Note

Question 2: Identify the correct journal entry to recognize an uncollected note.

Question 3: Determine the adjusting entry that should be made before the financial statements can be prepared.

Question 4: Identify the general ledger account that is credited to write off a customer’s account as uncollectible using the direct write-off method.

Question 5: Determine the statement that is true regarding the calculation of interest on a note.

Question 6: Identify the correct journal entry to record a note received from a customer to replace an account.

Question 7: Explain how Lowery Co. accounts for uncollectible accounts receivable using the direct write-off method.

Solution 1:
Matching correct terms with their descriptions:
1. Face Amount: The dollar amount listed on the promissory note.
2. Dishonored Note: A note that is not paid when it is due.
3. Maturity Value: The amount due when the note is paid off.
4. Maker: The party promising to pay a note.
5. Interest Rate: The amount charged for using the money of another party.
6. Notes Receivable: A formal written instrument that represents amounts due from customers.
7. Interest Revenue: The stated rate charged for using the money of another party.
8. Term: The time between the date a note is issued and the due date of the note.

Solution 2:
Answering the given questions:
Question 2: The correct journal entry to recognize the non-payment of a $6,000, 60-day, 12% note recorded on November 21 is (d) debit Accounts Receivable, $6,120; credit Notes Receivable, $6,000; Credit Interest Revenue, $120.
Question 3: The adjusting entry that should be made before preparing financial statements by Harper Company, who lends Hewell Company $40,000 on March 1, accepting a four-month, 6% interest note, is (c) Interest Receivable Interest Revenue, $800.
Question 4: If the direct write-off method of accounting for uncollectible receivables is used, the general ledger account that is credited to write off a customer’s account as uncollectible is (b) Accounts Receivable.
Question 5: Interest on a note can be calculated without knowledge of the (d) fair value of the note.
Question 6: The journal entry to record a note received from a customer to replace an account is (a) debit Notes Receivable; credit Accounts Receivable.
Question 7: The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable.

Suggested Resources/Books:
1) Financial Accounting: Tools for Business Decision Making by Paul D. Kimmel, Jerry J. Weygandt, and Donald E. Kieso
2) Accounting Principles, 13th Edition by Jerry J. Weygandt, Paul D. Kimmel, and Donald E. Kieso
3) Managerial Accounting: Tools for Business Decision Making by Jerry J. Weygandt, Paul D. Kimmel, and Donald E. Kieso
4) Accounting Made Simple: Accounting Explained in 100 Pages or Less by Mike Piper

Similar asked questions:
1) What is the difference between notes receivable and accounts receivable?
2) What adjusting entry should be made when a note receivable goes bad?
3) Can you please explain the direct write-off method of accounting for uncollectible accounts receivable?
4) What is the maturity value of a note?
5) How is interest on a note calculated?

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