Chapter 11, Problem P11.36CP

To determine

Accounting for Liabilities of a known amount: In accrual basis of accounting, there is a need to properly record all the incomes, expenses, assets and liabilities of a particular accounting period in order to prepare a true picture of the financial statements of the entity. Similarly, when it comes to liabilities, it is important to record all the liabilities whether they have been paid or to be paid in the next accounting period.

Requirement 1

To prepare:

Journal entry to record the issuance of note payable on September 1, 2019.

To determine

Requirement 2:

To prepare:

Journal entry to record the employee payroll and employer payroll tax entries on September 30, 2019.

To determine

To prepare:

Journal entry to record payment of salaries related to the month of September.

To determine

Requirement 4:

To prepare:

Journal entry to accrue interest on the note at December 31, 2019.

To determine

Requirement 5:

To prepare:

Journal entry to record the payment of note payable to bank.