Jim Murphy Borrowed $30,000 on a 120-Day 14% Note

question 34

Multiple Choice

Jim Murphy borrowed $30,000 on a 120-day 14% note. Jim paid $5,000 toward the note on day 95. On day 105 he paid an additional $6,000. Using the U.S. Rule, Jim's adjusted balance after the first payment is:

• A)$25,000
• B)$28,891.67
• C)$1,108.33
• D)$26,108.33
• E)None of these

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Definitions:

Finished Goods

Products that have completed the manufacturing process and are ready for sale.

Job-Order Costing

An accounting method that assigns costs to specific batches or job orders, making it suitable for companies producing unique products or jobs.

Direct Materials

Direct Materials are raw materials that are directly traceable to the manufacturing of a product and are an integral part of the finished product.

Manufacturing Overhead

All indirect costs associated with the production of goods, such as utilities, maintenance, and supplies not directly traceable to a product.