BUSA 101 – Chapter 10 -Current Liabilities

Quiz (1^st half of Chapter)

From the Publisher’s Website:

1. On June 5, Apex Co. issued a $30,000, 8% 120-day note payable to Jones Co. Assume the fiscal year of Apex Co. ends June 30. What is the amount of interest expense recognized by Apex in the current year?

a.$166.67
b.$800.00
c.$333.33
d.$633.34

2. On June 5, Apex Co. issued a $30,000, 8% 120-day note payable to Jones Co. Assume the fiscal year of Jones Co. ends June 30. What is the amount of interest revenue recognized by Jones in the following year?

a.$633.33
b.$400.00
c.$333.33
d.$166.67

3. Proceeds of $24,250 were received from discounting a $25,000, 90-day, non-interest-bearing note at a bank. The discount rate used by the bank in computing the proceeds was:

a.12%
b.14%
c.6%
d.10%

4. The cost of a product warranty should be included as an expense in the:

a.period the cash is collected for a product sold on account
b.future period when the cost of repairing the product is paid
c.future period when the product is repaired or replaced
d.period of the sale of the product

5. Jergens Co. issued a $17,500, 60-day, non-interest-bearing note to River City Bank. The discount rate is 9%. The cash proceeds to Jergens Co. is:

a.$16,975.00
b.$17,500.00
c.$17,237.50
d.$17,762.50

 

 

Selected transactions of Taylor Company, completed during the fiscal year ended December 31, are as follows:

 

Mar. 1		Purchased merchandise on account from Kelvin Co., $20,000.
Apr. 10		Issued a 60-day, 12% note for $20,000 to Kelvin Co. on account.
June 9		Paid Kelvin Co. the amount owed on the note of April 10.
Aug. 1		Issued a $50,000, 90-day note to Harold Co. in exchange for a building. Harold Co. discounted the note at 15%.
Oct. 30		Paid Harold Co. the amount due on the note of August 1.

 

Journalize the above transactions from Taylor company’s perspective.