Many lawsuits are filed against General Motors each year due to injuries incurred by customers driving its cars. In General Motors' accounting records, these lawsuits:

Multiple Choice

• Should always be reflected as long-term liabilities.

• Should be recorded as liabilities if payment for damages is probable and the amount can be reasonably estimated.

• Should never be recorded as liabilities.

• Should always be recorded as current liabilities.

• Should always be disclosed in footnotes to the financial statements.

2.

on November 1, Jake's Company signed a 120-day, 9% note payable, with a face value of $48,000. Jake's Company made the appropriate year-end accrual on December 31. What is the journal entry that Jake Company would make as of March 1 to record the payment of the note? (Use a 360-day year in your interest calculations.)

Multiple Choice

• Debit Notes Payable $48,000; debit Interest Payable $720; credit Cash $48,720.

• Debit Notes Payable $48,000; debit Interest Expense $1,440; credit Cash $49,440.

• Debit Notes Payable $49,440; credit Interest Payable $720; credit Interest Expense $720; credit Cash $48,000.

• Debit Notes Payable $48,000; debit Interest Payable $720; debit Interest Expense $720; credit Cash $49,440.