On November 1,2012,The Bagel Factory Signed a $100,000,6%,six-Month Note Payable

question 64

Multiple Choice

On November 1,2012,The Bagel Factory signed a $100,000,6%,six-month note payable with the amount borrowed plus accrued interest due six months later on May 1,2013.The Bagel Factory should report interest payable at December 31,2012,in the amount of:

• A)$0.
• B)$1,000.
• C)$2,000.
• D)$3,000.

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Definitions:

Upper Cash Limit

The maximum cash balance a company sets to hold on hand, beyond which excess funds are usually invested in short-term securities.

Lockbox Services

Banking services that process payments for companies by collecting and depositing checks into their accounts.

NPV

Net Present Value is a financial measure that computes the variance between the present value of cash inflows and outflows within a specific timeframe.

T-bills Yield

The return on investment for U.S. Treasury bills, being a measure of the interest income earned from holding these government securities.