Question 2 (Essay) Petrocelli Company obtains $40,000 in cash by signing a 7%, 6

Question

Question 2 (Essay) Petrocelli Company obtains $40,000 in cash by signing a 7%, 6-month, $40,000 note payable to First Bank on July 1. Petrocelli’s fiscal year ends on September 30. What information should be reported for the note payable in the annual financial statements?

Identify three taxes commonly withheld by the employer from an employee’s gross pay.

I really need help with this please. I have no ideas.

Check Figures:

Chapter 4:

         Total Assets: $4,775

         Post Closing Trial Balance Total Debits: $4,815

Chapter 7:

         Adjusted Cash Balance: $2,961

Chapter 9:

         Net Book Value in 2021:

                  Straight Line: $25,100

                  Double Declining: $12,636

                  Units of Activity: $22,350

Explanation / Answer

Question 2 part 1: On July 1 when the notes payble is signed the following entry is made in Petrocelli's books:

Accrued interest = 7%*3/12*40,000 = $700

Thus entry for interest payable:

The $40,000 note will be reported on the balance sheet as a current liability along with the $700 interest payable. The $700 interest expense will be reported on the income statement.

Question 2 part 2:

Three taxes commonly withheld by employers from employees’ gross pay are: (1) federal income taxes (2) state income taxes, and (3) social security (FICA) taxes.

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