test3-cheatsheet - Notes payable Initial Transaction...

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Notes payable Initial Transaction Interest maturity Debit Cash debit Interest expense Credit Notes Payable Credit Interest Payable Credit Cash Sales tax is not an expense Debit Cash Unearned Revenue Initial Debit Cash Debit Unearned ticket Revenue (current liability) Credit unearned ticket revenue Credit ticket Revenue Payroll - payroll deductions are recorded as liabilities. Record payment of payroll as Debit Sales & Wages; Credit Cash Employer expense of payroll as Debit Payroll Tax Expense; Credit FICA, Federal/State Unemployment Tax Payable BONDS Face value initial Interest Debit Cash Debit Bond Interest Expense debit Bond Interest Payable Credit Bonds Payable Credit Bond Interest Payable Credit Cash Discount – 100,000, 5yr 10% at 98 Debit Cash 98,000 Cost of borrowing = Interest +discount =52,000 Debit Discount on Bond Payable 2,000 amortization increases interest each period, carry value increases Credit Bonds Payable 100,000 contractual rate<market rate On January 1 Pierce Corporation issues $500,000, 5-year, 12% bonds at 96 with interest payable on January 1. The entry on December 31 to record accrued bond interest and the amortization of bond discount using the straight-line method will include a:c) credit to Discount on Bonds Payable, $4,000. When a discount is amortized, the debit to interest expense is the sum of the cash to paid ($500,000 X 12% = $60,000) plus the amount of discount amortization [($500,000 – ($500,000 X 96%))/5 = $4,000]. In this case, the debit to interest expense should be for $64,000, not $57,600. The entry to record accrued bond interest and the discount amortization includes a debit to interest expense for $64,000, a credit to bond discount for $4,000 and a
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This note was uploaded on 10/19/2011 for the course ACCOUNTING 102 taught by Professor Singh during the Spring '11 term at Wayne State University.

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test3-cheatsheet - Notes payable Initial Transaction...

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