Do It! Review 10-1a ]Your answer is partially correct. Try again. You and severa

Question

Do It! Review 10-1a ]Your answer is partially correct. Try again. You and several classmates are studying for the next accounting examination. They ask you to answer the following questions 2250 I. If cash is borrowed on a $54,000, 11-month, 10% note on August 1, how much interest expense would be incurred by December 317 2 The cash register total including sales taxes is $44,100, and the sales tax rate is 596, what is the sales taxes payable? .1 $44,100 is collected in advance on November 1 for 6-month magazine subscriptions, what amount of subscription revenue should be 1950 recognized on December 31? 16380

Explanation / Answer

Answer:- (1) $54000 * 10% * (5/12) =$2250

The interest expense would be incurred by December 31 is $2250.

(2) $44100 ÷ (100% + 5%) = $42000

     $44100 - $42000 (or $42000 × 0.05) =$2100

   The sales tax payable is $2000.

(3) $44100 ÷ 6months = $7350 × 2months = $14700

                            Or

     $44100 × (2 ÷ 6) =$14700

The amount of $14700 subscription revenue should be recognized on December 31.

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