Sales taxes collected by the retailer from customers are recorded as a(n)

a.

Liability

b.

Asset.

c.

Expense

d.

Revenue

Salam Company has total receipts for the month of $16,170 including sales taxes. If the sales tax rate is 5%, what are Salam's sales revenue for the month?

a.

Otherwise

b.

$16,798

c.

$16,170

d.

$15,400

Hamada Company borrows $20,000 on October 1 from Arab bank by signing a $20,000, 10%, six month note payable. The journal entry to record accrued interest at December 31, assuming adjusting entries are made only at the end of the year is:

a.

Debit Interest payable 500 and credit Interest expense 500

b.

Debit Interest expense 2,000 and credit Interest payable 2,000

c.

Debit Interest expense 500 and credit Interest payable 500

d.

Debit Interest expense 1,000 and credit Interest payable 1,000

First National Bank agrees to lend $100,000 on September 1, 2014, if Cole Williams Co. signs a $100,000, 12%, four-month note maturing on January 1. Cole Williams Co prepares financial statements on 31/12, the entry at maturity date (Jan 1, 2015) is.

a.

Debit both Interest payable 4,000 and Notes payable 100,000 and credit Accounts payable 104,000

b.

Debit each of Interest payable 3,000, Interest expense 1,000 and Notes payable 100,000 and credit Cash 104,000

c.

Debit both Interest expense 4,000 and Notes payable 100,000 and credit Cash 104,000

d.

Debit both Interest payable 4,000 and Notes payable 100,000 and credit Cash 104,000