9.2 Account for current liabilities of a known amount
1) The largest portion of accounts payable for most merchandising companies is related to the purchase of inventory on account.
2) Unearned revenues are typically classified as current liabilities.
3) A company receives a note payable for $5,000 at 10% for 50 days. How much interest (to the nearest cent) will the customer owe?
A) $10.00
B) $500.00
C) $68.49
D) $1.36
E) $86.49
4) If a liability is not properly classified, it will have an effect on the:
A) quick ratio.
B) current ratio.
C) both the quick and current ratio.
D) total dollars of liabilities.
E) total dollars of current assets.
5) Identify the general ledger accounts that would be debited and credited when making a payment on account, such as a telephone bill.
6) What is a major difference between an account payable and a note payable?
7) A company receives a note payable for $3,500 at 9% for 45 days. How much interest (to the nearest cent) will the customer owe using a 360-day year?
8) A past transaction or event must have occurred for a __________ to exist.
9) Journalize the following transactions for Alpha Company:
May 13 Purchased inventory on account from ABC for $4,000.
May 22 Purchased inventory on account from Sara for $2,500.
May 27 Paid off the account from ABC.