Question: You and several classmates are studying for the next accounting examination. They ask you to answer the following questions:
1. 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?
2. The cash register total including sales taxes is $42,000, and the sales tax rate is 5%. What is the sales taxes payable?
3. 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?