Genuine Parts Received a Promissory Note from a Customer on March

question 97

Multiple Choice

Genuine Parts received a promissory note from a customer on March 1, 2015.The face amount of the note is $8,000; the terms are 90 days and 9% interest.At the maturity date, the customer pays the amount due for the note and interest.What entry is required on the books of Genuine Parts on the maturity date assuming none of the interest had already been recognized?

• A)Increase Cash, $8,000, and decrease Notes Receivable $8,000
• B)Increase Cash, $8,180, increase Interest Revenue, $180, and decrease Notes Receivable, $8,000
• C)Increase Cash $8,720, decrease Notes Receivable $8,000, and increase Interest Revenue, $720
• D)No entry is required; the customer pays the amount due to the bank

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Definitions:

Net Investment

The total amount spent on acquiring, maintaining, and improving fixed assets, minus depreciation.

Marginal Tax Rate

The rate at which the last dollar of a taxpayer's income is taxed, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.

Market Value

The current price at which an asset or service can be bought or sold.

Annual Net Cash Flows

The total amount of money that flows into and out of a business over a year, after all revenues are collected and expenses are paid.