7. The maturity value ofa S40000, 9%, 40-day nose receivable dated July 3 is B)

Question

7. The maturity value ofa S40000, 9%, 40-day nose receivable dated July 3 is B) 540,400. 543,600. D) $40,000. The sale of receivables by a business A) B) is an indication that the business is owned by a captive finance company 8. indicates that the business is in financial difficulty C) D) can be a quick way to generate cash for operating needs. is generally the major revenue item on its income statement. 9. Young Company lends Dobson industries $40,000 on January 1, 2014, accepting a 9-month, 12% interest note. If Dobson dishonors the note and does maturity but Young expects the following entries should most likely be made by Young Company? not pay it in full at that it will eventually be able to collect the debt, which of A) Accounts Receivable 40,000 Notes Receivable 40,000 B) Accounts Receivable 43,600 Notes Receivable Interest Receivable 40,000 3,600 C) Accounts Receivable 43,600 Notes Receivable 40,000 3,600 40,000 Interest Revenue D) Cash 40,000 Notes Receivable Version 2 Page 3

Explanation / Answer

6)correct option is "B" -100

Interest = 10000*.06*60/360=100

7)correct option is B

Interest = 40000*.09*40/360=400

maturity valaue = 40000+400 =40400

8)correct option is c

sale of receivable is way to generate cash in cash of operational difficulty

9)correct option is C

Interest = 40000.12*9/12=3600

entry :

Accounts receivable debit 43600

Interest revenue credit 3600

note receivable credit 40000

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