Question 13 (Mandatory) (2.5 points)

Jones, Inc. has an Account Payable of $40,000 which it cannot pay on time. Jones vendor allows the company to replace the Accounts Payable with a 108-day, 7 percent, $40,000 interest-bearing note.

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What is the total interest (in dollars) which will accrue over the life of this note?

Question 13 options:

	$40,840
	$2,800
	$840
	$40,000

Question 14 (Mandatory) (2.5 points)

Jones, Inc. has an Account Payable of $40,000 which it cannot pay on time. Jones vendor allows the company to replace the Accounts Payable with a 108-day, 7 percent, $40,000 interest-bearing note.

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What is the maturity value of the note?

Question 14 options:

	$2,800
	$40,840
	$840
	$40,000

Question 15 (Mandatory) (2.5 points)

Jones, Inc. has an Account Payable of $40,000 which it cannot pay on time. Jones vendor allows the company to replace the Accounts Payable with a 108-day, 7 percent, $40,000 interest-bearing note.

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Provide the journal entry Jones will record upon issuance of the note:

Question 15 options:

	Dr. Note Receivable $40,000 Cr. Note Payable $40,000
	Dr. Notes Payable $40,000 Cr. Accounts Payable $40,000
	Dr. Accounts Payable $40,840 Cr. Note Payable $40,840
	Dr. Accounts Payable $40,000 Cr. Note Payable $40,000

Question 16 (Mandatory) (2.5 points)

Jones, Inc. has an Account Payable of $40,000 which it cannot pay on time. Jones vendor allows the company to replace the Accounts Payable with a 108-day, 7 percent, $40,000 interest-bearing note.

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Assume Jones does not close its books during the life of the note. Provide the journal entry Jones will record upon maturity of the note:

Question 16 options:

	Dr. Note Payable $40,000 Dr. Interest Revenue $840 Cr. Cash $40,840
	Dr. Note Payable $40,840 Cr. Cash $40,840
	Dr. Note Payable $40,000 Dr. Interest Expense $840 Cr. Cash $40,840
	Dr. Note Payable $40,000 Cr. Cash $40,000