Learning Objective 4-5
1) Ace Electronics accepted a promissory note from Fenstermaker, who promised to pay Ace $2,000 plus 6% interest at the end of six months. The maker of the note is ________ and the payee is _________.
A) Fenstermaker; Ace Electronics
B) Fenstermaker; Fenstermaker
C) Ace Electronics; Ace Electronics
D) Ace Electronics; Fenstermaker
2) Ace Electronics accepted a promissory note from Fenstermaker, who promised to pay Ace $2,000 plus 6% interest at the end of six months. What is the amount of interest that will be paid at the end of the six-month period?
A) $120
B) $240
C) $60
D) $2,060
3) Ace Electronics accepted a promissory note from Fenstermaker, who promised to pay Ace $2,000 plus 6% interest at the end of six months. When Ace first accepts the note, it should record ________.
A) a note payable of $2,000
B) a note receivable of $2,000
C) a note payable of $2,060
D) a note receivable of $2,060
4) Ace Electronics accepted a promissory note from Fenstermaker, who promised to pay Ace $2,000 plus 6% interest at the end of six months. When Ace first accepts the note, it should record interest receivable of ________.
A) $120
B) $0
C) $60
D) $240
5) Ace Electronics accepted a promissory note from Fenstermaker, who promised to pay Ace $2,000 plus 6% interest at the end of six months. When Fenstermaker first gives Ace the note, Fenstermaker should record ________.
A) a note payable of $2,000
B) a note receivable of $2,000
C) a note payable of $2,060
D) a note receivable of $2,060
6) Acme, Inc. accepted a promissory note from NadirCo, who promised to pay Acme $5,000 plus 6% interest at the end of four months. What is the amount of interest that will be paid at the end of the four-month period?
A) $300
B) $100
C) $600
D) $5,000
7) Acme, Inc. accepted a promissory note from NadirCo, who promised to pay Acme $5,000 plus 6% interest at the end of four months. When Acme first accepts the note, it should record a ________.
A) note payable of $5,000
B) note receivable of $5,000
C) note payable of $5,100
D) note receivable of $5,150
8) Acme, Inc. accepted a promissory note from NadirCo, who promised to pay Acme $5,000 plus 6% interest at the end of four months. When Acme first accepts the note, it should record Interest receivable of ________.
A) $300
B) $100
C) $0
D) $150
9) Acme, Inc. accepted a promissory note from NadirCo, who promised to pay Acme $5,000 plus 6% interest at the end of four months. When NadirCo first gives Acme the note, NadirCo should record a ________.
A) note payable of $5,000
B) note receivable of $5,000
C) note payable of $5,100
D) note receivable of $5,100
10) Acme, Inc. accepted a promissory note from NadirCo, who promised to pay Acme $5,000 plus 6% interest at the end of four months. When NadirCo pays the note, Acme will receive ________.
A) $5,000
B) $5,300
C) $5,100
D) $5,150
11) Accounts receivable are interest-bearing, while notes receivable are not.
12) The amount of interest revenue recorded during a single month on a 6%, 3-month note receivable will be the same as the interest revenue on a 6%, 6-month note receivable.
13) The interest revenue from a 6%, 2-year note receivable will not be recorded until the year the interest is collected.
14) Notes receivable usually have a collection period that is longer than accounts receivable.