Date Account Titles and Explanation Debit Credit October 1 Date Account Titles a

Question

Date

Account Titles and Explanation

Debit

Credit

October 1

Date

Account Titles and Explanation

Debit

Credit

December 31

(To record interest on the note)

December 31

(To record discount on the note)

Open Show Work

The following are selected 2017 transactions of Blue Corporation.
Sept. 1 Purchased inventory from Encino Company on account for $37,600. Blue records purchases gross and uses a periodic inventory system. Oct. 1 Issued a $37,600, 12-month, 8% note to Encino in payment of account. Oct. 1 Borrowed $37,600 from the Shore Bank by signing a 12-month, zero-interest-bearing $41,680 note.

Explanation / Answer

Answer:

1

Sep 1

Purchases

37,600

Accounts Payable

37,600

Oct 1

Accounts Payable

37,600

Notes Payable

37,600

Oct 1

Cash

37,600

Discount on Notes Payable

4,080

Notes Payable

41,680

__________________________________________________________

(b) Prepare adjusting entries at December 31.

Dec 31

Interest Expense [$37,600 × 8.00% × (3/12)]

752

Interest Payable

752

Dec 31

Interest Expense

1,020

Discount on Notes Payable [4,080 × (3/12)]

1,020

_______________________________________________________

C)

total net liability to be reported on the December 31 balance sheet for the interest-        bearing note.

Note payable

$37,600

Interest payable

752

$38,352

the total net liability to be reported on the December 31 balance sheet for the zero-interest- bearing note.

zero-interest- bearing balance

Note payable

$41,680

Less discount ($4,080 - $1,020)

3,060

$38,620

Sep 1

Purchases

37,600

Accounts Payable

37,600

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.