ST Liabilities test (Student) Data Review View ACROBATTell me what you want to d

Question

ST Liabilities test (Student) Data Review View ACROBATTell me what you want to do.. Page Layout Formulas Data Review View ACROBAT Enable Editing reful-files from the Internet can contain vinuses. Unless you need to edit, it's safer to stay in Protected View Descriptions of Transactions o. Test Debit Credit 5, A company agreed to sign a notes payable in exchange for The note was for 70 days, at 10% Dated 1/1. (simple intere Record the interest on the above note at the end of the first month Use 360 for the days of the year Record the interest on the note at the end of the second month. This month is not a Leap Year. Use simple interest Record payment of the note at the end of its life Record the following discounted note, used to acquire cash. Face value of note:6,000 Disccount The note is for 1 month 150 Record accrual of interest on above note. The above note became due. Record payment A company has long-term note-payable in the amout of 60,000 12,000 of this debt became payable with the next year kCentre Esc F1 F3 F4

Explanation / Answer

1. (a) Entry to record note payable for $5,000 at 10% for 70 days. Date Account Title Debit Credit 1/1 Cash 5000 Note payable 5000    (b) Entry to record interest accrued at the end of the first month (31 days) Date Account Title Debit Credit 1/31 Interest expense 43 Interest payable 43     (c) Entry to record interest accrued at the end of second month (28 days) Date Account Title Debit Credit 2/28 Interest expense 39 Interest payable 39    (d) Entry to record the payment on the due date (after 70 days)                 Interest for 11 days (70 days - 31 days in january - 28 days in February)                   =5,000 x 10% x 11 /360 = 15 Date Account Title Debit Credit 3/11 Note payable 5000 Interest payable 82 Interest expense 15 Cash 5097 2.    (a)      Entry to record discounted note Date Account Title Debit Credit Cash 4850 Prepaid interest 150 Note payable 5000      (b)         To record interest on the note Date Account Title Debit Credit Interest expense 150 Prepaid interest 150      (c)         To record payment of the note Date Account Title Debit Credit Note payable 5000 Cash 5000 3. To record payment of $12,000 from a note payable of $60,000 Date Account Title Debit Credit Note payable - Long term 12000 Cash 12000 4. Entry to record accrued salaries for 2 days (Monday and Tuesday)      at the rate of $1,000 per day Date Account Title Debit Credit Salaries expense 2000 Salaries payable 2000 5. Entry to record warrany expenses accrued @6% on sales of $100,000 Date Account Title Debit Credit Product Warranty Expense 6000 Product warranty Payable 6000 6. Entry to record income tax @36% on net income of $400,000 Date Account Title Debit Credit Income tax expense 144000 Income tax payable 144000

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