Accounting Chapter 10

The entry to record the proceeds upon issuing an interest-bearing note is

Cash Notes Payable

The entry to record the issuance of an interest-bearing note credits Notes Payable for the note's

Face value

Metropolitan Symphony sells 200 season tickets for $50,000 that represents a five concert season. The amount of unearned revenue after the second concert is $20,000.

False

The higher the sales tax rate, the more profit a retailer can earn

False

On October 1, Steve's Carpet Service borrows $350,000 from First National Bank on a 3-month, $350,000, 8% note. What entry must Steve's Carpet Service make on December 31 before financial statements are prepared?

Interest Expense 7,000 Interest Payable 7,000

Admire County Bank agrees to lend Givens Brick Company $600,000 on January 1. Givens Brick Company signs a $600,000, 8%, 9-month note. What is the adjusting entry required if Given Brick Company prepares financial statements on June 30?

Interest Payable 24,000 Cash 24,000

Unearned Rent Revenue is

Reported as a current liability

A company whose current liabilities exceed its current assets may have a liquidity problem

True

If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount.

True

Notes payable usually require the borrower to pay interest.

True