Problem 7.2 On March 1, 2009 the accounting records of Triple Threat Inc. showed the following liability and accounts balances. Accounts Payable $ 38,500 Short-term notes payable $ 12,000 Interest payable $ 1,050 Unearned service revenue $ 6,400 1. On March 1, Triple Threat Inc. signed a 6-month note for $ 25,000 at 6%. 2. During March, Triple Threat Inc. paid off the $ 12,000 short-term note and interest payable shown on the March 1 balance sheet. 3. The company also paid off the beginning balance in accounts payable. 4. During the month of March, Triple Threat purchased $ 50,000 of merchandise on account. 5. Also during March, Triple Threat?s employees earned salaries of $ 35,000, Withholdings related to these wages were $ 5,355 for social security (FICA), $ 4000 for federal income tax, and $ 1,500 for state income tax. The company will pay March salaries and taxes withheld on April 1. No entry had been recorded for salaries or payroll tax expenses as of March 31. Required: a. Use the accounting equation to record the transactions described. b. Show how Triple Threat Inc. would record the interest on the notes payable and the salary expense and payroll tax expense. c. Prepare the current liabilities section of the balance sheet at March 31, 2009.
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