acctg 9 - describe current and long term liabilities and their characteristics

short term note payable

A written promise made by the business to pay a debt, usually involving interest, within one year or less.

Fortiz Co. receives $85 for the sale of merchandise with a sales price of $80 and sales tax of $5. The entry to record the $5 sales tax would require which of the following? Credit to Sales Tax Payable Debit to Sales Tax Expense Debit to Sales Tax Payable Credit to Sales Tax Revenue Debit to Sales Tax Revenue Credit to Sales Tax Expense

Credit to Sales Tax Payable

John Grey owns Grey's Snow Plowing. In October, Grey's collects $12,000 cash for 6 commercial accounts for which he will provide snowplowing for the entire season. To record this transaction, Grey will enter which of the following entries? Debit to Unearned Plowing Revenue Debit to Cash Credit to Unearned Plowing Revenue Credit to Cash Debit to Plowing Revenue Credit to Plowing Revenue

Debit to Cash Credit to Unearned Plowing Revenue

John Grey owns Grey's Snow Plowing. In October, he collects $12,000 cash for 6 commercial accounts for which he will provide snowplowing for the next three months. John recorded the cash collection as an unearned revenue. To record the adjusting entry in November, when $4,000 has been earned, Grey will enter which of the following entries? (Check all that apply.) Credit to Unearned Plowing Revenue Debit to Unearned Plowing Revenue Credit to Cash Debit to Cash Credit to Plowing Revenue Earned Debit to Plowing Revenue Earned

Debit to Unearned Plowing Revenue Credit to Plowing Revenue Earned

On November 1, Lance Co. borrows $90,000 cash from First Bank by signing a 90-day, 5% interest-bearing note. On December 31, Lance will record an adjusting entry by crediting _______ in the amount of ______. Cash; $750 Interest Expense; $750 Interest Payable; $1,125 Cash; $1,125 Interest Expense; $1,125 Interest Payable; $750

Interest Payable; $750

Zion Co. sells $100 of merchandise and collects $10 sales tax. The sales tax is recorded to which account?

Sales tax payable

Amounts received in advance from customers for future products or services are typically recorded in a liability account called _______

Unearned Revenues

a promissory note is the same thing as

a note payable

what is a promissory note

a written promise to pay a specified amount of money on demand or at a definite time

A liability created by buying goods or services on credit is typically recorded to

accounts payable

On December 1, Campbell Co. borrowed $10,000 cash from Second Bank by signing a 90-day, 6% interest-bearing note. On December 31, Campbell accrued interest expense of $50. Campbell does not use reversing entries. On March 1, the due date of the note, Campbell will record the payment with debit entries to which of the following accounts? (Check all that apply.) Multiple select question. Notes Payable for $10,000 Interest Payable for $50 Cash for $10,150 Interest Expense for $100

all accounts except for cash

Tire Co. collected $2,000 in sales tax during the month of October. The entry that shows the remittance of this sales tax to the state government in November would include a credit to the

cash account

On December 1, Hansen Co. borrowed $100,000 cash from National Bank by signing a 90-day, 6% interest-bearing note. On December 31, Hansen recorded an adjusting entry to record interest expense of $500. On March 1, the due date of the note, Hansen will record interest expense as a (debit/credit) ________ in the amount of ______ debit; $500 debit; $1,000 debit; $1,500 credit; $1,000 credit $1,500 credit; $500

debit; $1,000

(..) is the difference between the amount borrowed and the amount repaid.

interest

known liabilities

measurable obligation arising from agreements, contracts, or laws ex. accounts payable, notes payable, payroll obligations, sales taxes and unearned revenue

Bushra Co. replaced a $1,000 account payable balance to Elin Co. with a 120-day, $1,000 note bearing 8% annual interest. Bushra's entry to record this transaction would include a credit to which account?

notes payable

Bushra Co. replaced a $1,000 account payable balance to Elin Co. with a 120-day, $1,000 note bearing 8% annual interest. Bushra's entry to record this transaction would include a credit to which account? Accounts Payable Accounts Receivable Notes Receivable Notes Payable Cash

notes payable

Current liabilities are due within

one year or the operating cycle, whichever is longer. All other liabilities are long term.

the_______of a note is the amount that the signer of a note agrees to pay back when it matures, not including interest.

principal

what is the equation to calculate interest rate on a notes payable?

principal of note x percentage x days in fraction of time out of 360 days

Liabilities are

probable future payments of assets or services that past transactions or events obligate an entity to make.

Damen's Co. sells merchandise with a list price of $500 and collects sales tax of $50. The sales tax would be recorded with a credit to which account?

sales tax payable

Cadie Construction Co. signed a note promising to pay a cement supplier $1,000 60-days from now. As a result of this transaction, Cadie would record a(n) ________ on her balance sheet account payable prepaid expense long-term note payable short-term note payable

short-term note payable

A company sells 12-month subscriptions to popular magazines. During the month of May, the company sells $10,000 in magazines, which will start in June. The journal entry to record the sales not yet earned will include a credit to which account?

unearned subscription revenue