Calculating and Journalizing Payroll Tax Expense

The video tutorial explains notes payable through examples, covering journal entries, interest calculations, and adjustments. It demonstrates how to handle notes payable that span multiple years, within a single year, and over a short-term period. The tutorial emphasizes the importance of accurate journal entries and interest calculations for financial accuracy.

What is the initial journal entry when Sierra Company borrows $100,000 from Tango Company?

• Debit Notes Payable $100,000; Credit Cash $100,000

• Debit Cash $100,000; Credit Notes Payable $100,000

• Debit Interest Expense $100,000; Credit Cash $100,000

• Debit Cash $100,000; Credit Interest Payable $100,000

How is the interest accrued by December 31 calculated for a nine-month note starting on September 1?

• Principal x Interest Rate x (5/9)

• Principal x Interest Rate x (9/12)

• Principal x Interest Rate x (4/9)

• Principal x Interest Rate x (12/12)

What is the journal entry for the final payment of the note on June 1 of the following year?

• Debit Cash $106,000; Credit Notes Payable $100,000; Credit Interest Expense $6,000

• Debit Notes Payable $100,000; Debit Interest Payable $2,667; Debit Interest Expense $3,333; Credit Cash $106,000

• Debit Notes Payable $100,000; Credit Cash $100,000

• Debit Interest Expense $6,000; Credit Cash $6,000

When a note starts and ends within the same year, how is the interest handled?

• Interest is added to the principal

• Interest is not recorded

• Interest is expensed all at once

• Interest is divided between two years

For a 45-day note starting on December 1, what is the interest rate used in the calculation?

• 10%

• 5%

• 12%

• 8%

How is the interest for a 45-day note calculated using the bankers rule?

• Principal x Interest Rate x (45/360)

• Principal x Interest Rate x (45/365)

• Principal x Interest Rate x (30/365)

• Principal x Interest Rate x (30/360)

What is the journal entry for the final payment of a 45-day note on January 15?

• Debit Interest Expense $1,250; Credit Cash $1,250

• Debit Notes Payable $100,000; Credit Cash $100,000

• Debit Cash $101,250; Credit Notes Payable $100,000; Credit Interest Expense $1,250

• Debit Notes Payable $100,000; Debit Interest Payable $833; Debit Interest Expense $417; Credit Cash $101,250