71. Admire County Bank agrees to lend Givens Brick Company $500,000 on January 1. Givens Brick Company signs a $500,000, 8%, 9-month note. The entry made by Givens Brick Company on January 1 to record the proceeds and issuance of the note is
a.Interest Expense......................................30,000
Cash.470,000
Notes Payable...........................................500,000
b.Cash...............................................500,000
Notes Payable...........................................500,000
c.Cash...............................................500,000
Interest Expense...........................................30,000
Notes Payable...........................................530,000
d.Cash...............................................500,000
Interest Expense...........................................30,000
Notes Payable...........................................500,000
Interest Payable...........................................30,000
72. Admire County Bank agrees to lend Givens Brick Company $500,000 on January 1. Givens Brick Company signs a $500,000, 8%, 9-month note. What is the adjusting entry required if Givens Brick Company prepares financial statements on June 30?
a.Interest Expense......................................20,000
Interest Payable...........................................20,000
b.Interest Expense......................................20,000
Cash20,000
c.Interest Payable......................................20,000
Cash20,000
d.Interest Payable......................................20,000
Interest Expense...........................................20,000
73. Admire County Bank agrees to lend Givens Brick Company $500,000 on January 1. Givens Brick Company signs a $500,000, 8%, 9-month note. What entry will Givens Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?
a.Notes Payable........................................530,000
Cash530,000
b.Notes Payable........................................500,000
Interest Payable...........................................30,000
Cash530,000
c.Interest Expense......................................30,000
Notes Payable...........................................500,000
Cash530,000
d.Interest Payable......................................20,000
Notes Payable...........................................500,000
Interest Expense...........................................10,000
Cash530,000
74. As interest is recorded on an interest-bearing note, the Interest Expense account is
a.increased; the Notes Payable account is increased.
b.increased; the Notes Payable account is decreased.
c.increased; the Interest Payable account is increased.
d.decreased; the Interest Payable account is increased.
75. When an interest-bearing note matures, the balance in the Notes Payable account is
a.less than the total amount repaid by the borrower.
b.the difference between the maturity value of the note and the face value of the note.
c.equal to the total amount repaid by the borrower.
d.greater than the total amount repaid by the borrower.
76. On October 1, Steve's Carpet Service borrows €600,000 from First National Bank on a 3-month, €600,000, 8% note. What entry must Steve's Carpet Service make on December 31 before financial statements are prepared?
a.Interest Payable......................................12,000
Interest Expense...........................................12,000
b.Interest Expense......................................48,000
Interest Payable...........................................48,000
c.Interest Expense......................................12,000
Interest Payable...........................................12,000
d.Interest Expense......................................12,000
Notes Payable...........................................12,000
77. On October 1, Steve's Carpet Service borrows €600,000 from First National Bank on a 3-month, €600,000, 8% note. The entry by Steve's Carpet Service to record payment of the note and accrued interest on January 1 is
a.Notes Payable........................................612,000
Cash612,000
b.Notes Payable........................................600,000
Interest Payable...........................................12,000
Cash612,000
c.Notes Payable........................................600,000
Interest Payable...........................................48,000
Cash648,000
d.Notes Payable........................................600,000
Interest Expense...........................................12,000
Cash612,000
78. Interest expense on an interest-bearing note is
a.always equal to zero.
b.accrued over the life of the note.
c.only recorded at the time the note is issued.
d.only recorded at maturity when the note is paid.
79. On September 1, Joe's Painting Service borrows $250,000 from National Bank on a 4-month, $250,000, 6% note. What entry must Joe's Painting Service make on December 31 before financial statements are prepared?
a.Interest Payable......................................5,000
Interest Expense...........................................5,000
b.Interest Expense......................................15,000
Interest Payable...........................................15,000
c.Interest Expense......................................5,000
Interest Payable...........................................5,000
d.Interest Expense......................................5,000
Notes Payable...........................................5,000
80. On September 1, Joe's Painting Service borrows $250,000 from National Bank on a 4-month, $250,000, 6% note. The entry by Joe's Painting Service to record payment of the note and accrued interest on January 1 is
a.Notes Payable........................................255,000
Cash255,000
b.Notes Payable........................................250,000
Interest Payable...........................................5,000
Cash255,000
c.Notes Payable........................................250,000
Interest Payable...........................................15,000
Cash265,000
d.Notes Payable........................................250,000
Interest Expense...........................................5,000
Cash255,000