A current liability is a debt that can reasonably be expected tobe paid

a within one year or the operating cycle, whichever islonger.

b between 6 months and 18 months.

c out of currently recognized revenues.

d out of cash currently on hand.

Assume a 360-day year for calculating interest. Theinterest charged on a $200,000 note payable, at the rate of 8%, ona 90-day note would be

a. $16,000.

b $8,888.

c $4,000.

d $1,333.

On September 1, Joe's Painting Service borrows $100,000 fromNational Bank on a 4-month, $100,000, 6% note. What entrymust Joe's Painting Service make on December 31 before financialstatements are prepared?

a Interest Payable...................................................................... 2,000

Interest Expense............................................................ 2,000

b Interest Expense..................................................................... 6,000

Interest Payable............................................................. 6,000

c Interest Expense..................................................................... 2,000

Interest Payable............................................................. 2,000

d Interest Expense..................................................................... 2,000

NotesPayable................................................................ 2,000

Crawford Company has total proceeds (before segregation of salestaxes) from sales of $4,770. If the sales tax is 6%, theamount to be credited to the account Sales Revenue is:

a. $4,770.

b $4,484.

c $5,056.

d $4,500.

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

a revenue.

b liability.

c expense.

d asset.