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?

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