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Unformatted text preview: P8-2 State Mill Company1A. Notes Payable Transactions25-Nov Equipment$86,400 Notes Payable$86,400 Acquired loading equipment by issuing a 10% 60-day note.31-Dec Interest Expense$852 Interest Payable$852 Accrued interest for 36 days[$86,400 x 10% x 36/365 = $852.16]24-Jan Notes Payable$86,400 Interest Expense$568 ($1,420 - $852)Interest Payable$852 Cash$87,820 ($86,400 + $1,420)Paid principal and interest on note[$86,400 x 10% x 60/365 = $1,420.27]1B. CommentsWhen Notes Payable appears on the balance sheet, it is reasonable to assume that there wouldalso be Interest Payable. If Interest Payable did not appear either the company is up to date on itsinterest payments (because the payment schedule includes interest) or the company may haveommitted it.2. Payroll Expenses31-Oct Wages Expense$185,500 Employees' Federal Income Taxes Payable$47,442 Employees' State Income Taxes Payable$7,818 Employees' Social Security Tax Payable$11,501 Employees' Medicare Tax Payable$2,690 Employees' Medical Insurance Premiums Payable...
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- Summer '07