1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9-1 Notes Payable

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 9-1 BORROWING MONEY WITH A NOTE PAYABLE page 261 March 2. Signed a 180-day, 10% note, $1,500.00. R143.

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 9-1 TimeNumber of Days March 2 through 3129(31–2=29) April30 May31 June30 July31 August 1 through 2929(Maturity date: Aug. 29) 180days 1.Compute the number of days in the first month. 2.Add the number of days in subsequent months until the total equals the number of days of the note. CALCULATING THE MATURITY DATE page 262 1 2

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 9-1 PrincipalInterest Rate Time as Fraction of Year = Interest for Fraction of Year ×× CALCULATING INTEREST page 262 $1,500.0010% 180 360 =$75.00 ××

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 9-1 1.Principal of note. 3.Maturity value of note. 2.Interest of note. PAYING A NOTE PAYABLE page 263 1 2 3 August 29. Paid cash for the maturity value of the Mar. 2 note: principal, $1,500, plus interest, $75.00; total, $1,575.00. Check No. 359.

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 9-1 TERMS REVIEW promissory note notes payable date of a note principal of a note maturity date of a note interest interest rate of a note interest expense maturity value page 265

7. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9-2 Prepaid Expenses

8. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 9-2 1.Debit the expense account. 2.Credit the asset account. SUPPLIES INITIALLY RECORDED AS AN ASSET page 267 1 2

9. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 9-2 1.Debit the asset account. 2.Credit the expense account. SUPPLIES INITIALLY RECORDED AS AN EXPENSE page 268 1 2

10. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 9-2 1.Debit the expense account. 2.Credit the asset account. REVERSING ENTRY—SUPPLIES INITIALLY RECORDED AS AN EXPENSE page 269 1 2

11. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 9-2 1.Debit the asset account. 2.Credit the expense account. PREPAID INSURANCE INITIALLY RECORDED AS AN EXPENSE page 270 1 2

12. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 9-2 1.Debit the expense account. 2.Credit the asset account. REVERSING ENTRY FOR PREPAID INSURANCE page 270 1 2

13. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 9-2 TERMS REVIEW prepaid expenses reversing entry page 271

14. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 9-3 Accrued Expenses

15. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 15 LESSON 9-3 Principal Interest Rate Time as Fraction of Year Interest for 15 Days  = 1.Determine the amount of accrued interest. 2.Debit the expense account. 3.Credit the liability account. JOURNALIZING ACCRUED INTEREST EXPENSE page 272 1 2 3 $7,500.00  10%  = $31.25 15 360

16. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 16 LESSON 9-3 1.Debit the liability account. 2.Credit the expense account. REVERSING ENTRY FOR ACCRUED INTEREST page 273 1 2

17. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 17 LESSON 9-3 Notes Payable 2/137,500.001/1 Bal.7,500.00 Interest Expense 2/13125.001/1 Bal.31.25 Principal Interest Rate Time as Fraction of Year Total Interest Due  = 1.Calculate total interest due at maturity. 2.Debit Notes Payable, $7,500.00. 3.Debit Interest Expense, $125.00. (Credit Cash, $7,625.00.) 4.Determine the interest expense for the current period. PAYMENT OF NOTE AT MATURITY page 273 1 2 3 $7,500.00  10%  = $125.00 60 360 Interest Expense Recorded in Previous Period Total Interest Expense for the Note Interest Expense Recorded in Current Period – = $125.00– = $93.75 $31.254

18. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 9-3 1.Debit the expense accounts. 2.Credit the liability accounts. JOURNALIZING ACCRUED SALARY EXPENSE page 274 1 2

19. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 19 LESSON 9-3 1.Debit the liability accounts. 2.Credit the expense accounts. REVERSING ENTRY FOR ACCRUED SALARY page 275 1 2

20. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 20 LESSON 9-3 1.Debit the expense account. 2.Credit the liability accounts. JOURNALIZING ACCRUED EMPLOYER PAYROLL TAXES EXPENSE page 276 1 2

21. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 21 LESSON 9-3 1.Debit the liability accounts. 2.Credit the expense account. REVERSING ENTRY FOR ACCRUED EMPLOYER PAYROLL TAXES page 276 1 2

22. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 22 LESSON 9-3 1.Debit the expense account. 2.Credit the liability account. JOURNALIZING ACCRUED FEDERAL INCOME TAX EXPENSE page 277 1 2

23. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 23 LESSON 9-3 TERM REVIEW accrued expenses page 279