Teller Purchased Merchandise from TechCom on October 17 of the Current

question 90

Multiple Choice

Teller purchased merchandise from TechCom on October 17 of the current year.TechCom accepted Teller's $4,800,90-day,10% note as payment.What entry should TechCom make on January 15 of the next year when the note is paid?

• A)
• \[\begin{array} { | l | r | r | }
• \hline \text { Notes Receivable } & 4,800 & \\
• \hline \text { Interest Receivable } & 120 & \\
• \hline \text { Sales } & & 4,920 \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { | l| r | r | }
• \hline \text { Cash } & 4,920 & \\
• \hline \text { Notes Receivable } & & 4,920 \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 4,920 & \\
• \hline \text { Interest Revenue } & & 100 \\
• \hline \text { Interest Receivable } & & 20 \\
• \hline \text { Notes Receivable } & & 4,800 \\
• \hline
• \end{array}\]
• D)
• \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 4,920 & \\
• \hline \text { Interest Revenue } & & 20 \\
• \hline \text { Interest Receivable } & & 100 \\
• \hline \text { Notes Receivable } & & 4,800 \\
• \hline
• \end{array}\]
• E)
• \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 4,920 & \\
• \hline \text { Interest Revenule } & & 120 \\
• \hline \text { Notes Receivable } & & 4,800 \\
• \hline
• \end{array}\]

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Definitions:

Variable

An element, feature, or factor that is liable to vary or change.

Machine Hours

A measure of production time, calculated by the total hours machines are in operation over a set period.

Under-Applied Overhead

A situation where the allocated overhead costs are less than the actual overhead incurred.

Over-Applied Overhead

A situation in cost accounting where the allocated overhead for a period exceeds the actual overhead costs incurred.