Page 56 - Account for Ag - 2019

9-20 Accounting for Agriculture CH 9]

Name:

QUESTIONS

1. (a) What is the commercial practice regarding the denominator of the fraction for time in interest calculation?
(b) Give the basic formula for computing interest.

(a) _____________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(b) ______________________________________________________________________________
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2. Explain the meaning of the following terms:

(a) Discounting a note.
(b) Discount
(c) Proceeds.
(d) Discount rate.

(a) Discounting a note: _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(b) Discount: ____________________________________________________________________
(c) Proceeds. _____________________________________________________________________

(d) Discount rate __________________________________________________________________
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3. The series of five transactions recorded in the following T accounts were incident to a sale to a customer. Describe
each transaction briefly.
Notes Accounts
Cash Receivable Receivable
(c) 602.97 (d) 606.00 (b) 600.00 (c) 600.00 (a) 600.00 (b) 600.00
(e) 609.03 (d) 606.00 (e) 606.00

Interest
Sales Income
(a) 600.00 (c) 2.97
(e) 3.03

(a) _____________________________________________________________________________
(b) ______________________________________________________________________________
(c) _____________________________________________________________________________
(d) _____________________________________________________________________________
(e) ______________________________________________________________________________
________________________________________________________________________________
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