Do It! Review 10-1a You and several classmates are studying for the next account

ID: 2398096 • Letter: D

Question

Do It! Review 10-1a You and several classmates are studying for the next accounting examination. They ask you to answer the following questions: 1. If cash is borrowed on a $61,200, 11 month, 10% note on August 1, how much interest expense would be incurred by December 32 2. The cash register total including sales taxes is $43,470, and the sales tax rate is 5%. what is the sales taxes payable? 3. If $43,470 is collected in advance on November 1 for 6-month magazine subscriptions, what amount of subscription revenue should be recognized on December 31?

Explanation / Answer

Calculation

Answer

If cash is borrowed on $61200 11 month 10% note on August 1st ,How much interest would be incurred by December

(((61200*10/100)/12*11)*5/11)

$ 2550

The cash register total including sales taxes is $ 43470. Sales tax rate is 5%. What is the sales tax payable?

(43470/105*5)

$ 2070

If $43470 is collected in advance on November 1 for 6 month magazine subscription, what amount of subscription revenue should be recognized on December 31st.

(43470/6*2)

$ 14490

Note for answer 1

10% rate is an annual rate and note is payable in 11 months so 10 interest will be calculated for only months. 5 months interest will be shown at December end