5. Champion sells $5,000,000 of products to Target Corporation. Target signs a promissory note that...
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5. Champion sells $5,000,000 of products to Target Corporation. Target signs a promissory note that has the following terms: annual interest rate of 6% and principal plus interest due in 8 months. Assuming that Target repays the entire amount as scheduled after 8 months, what is the Maturity Value of Champion's note receivable? a. $4,800,000 b. $5,000,000 c. $5,200,000 d. $5,300,000 6. Which of the following statements is TRUE? a. Allowance for Doubtful Accounts is a liability account. b. The allowance method is not approved by GAAP. c. If an account receivable was written off, it cannot be reinstated. d. Bad Debt Expense is an operating expense. 7. Assume that the $6,500, 60-day, 7% note was received on January 4 and that the fiscal year ended on January 31. Interest will be paid by the borrower on the maturity date of the note. The adjusting entry to record the accrued interest revenue as of January 31 would be (amounts rounded to nearest dollar, use 360-day year): a. Debit Interest Receivable 34; Credit Interest Revenue 34 b. Debit Interest Receivable 76; Credit Interest Revenue 76 c. Debit Notes Receivable 205; Credit Interest Revenue 205 d. Debit Cash 455; Credit Interest Revenue 455
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