Answer:
If cash is borrowed on a $60,000, 9-month, 10% note on August 1, how much interest expense would be incurred by December 31?
accrued interest expense = $60,000 x 10% x 5/12 = $2,500
The cash register total including sales taxes is $42,000, and the sales tax rate is 5%. What is the sales taxes payable?
100%X + 5%X (sales tax) = $42,000
105%X = $42,000
X = $42,000 / 105% = $40,000
sales tax = total invoice - X = $42,000 - $40,000 = $2,000
If $42,000 is collected in advance on November 1 for 6-month magazine subscriptions, what amount of subscription revenue should be recognized on December 31?
accrued subscription revenue = $42,000 x 2/6 = $14,000
