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Exercise 13-2 (Part Level Submission) The following are selected 2014 transactions of Sean Astin Corporation. Sept....

Exercise 13-2 (Part Level Submission)

The following are selected 2014 transactions of Sean Astin Corporation.
Sept. 1 Purchased inventory from Encino Company on account for $50,250. Astin records purchases gross and uses a periodic inventory system.
Oct. 1 Issued a $50,250, 12-month, 8% note to Encino in payment of account.
Oct. 1 Borrowed $91,220 from the Shore Bank by signing a 12-month, zero-interest-bearing $97,580 note Prepare adjusting entries at December 31    Prepare adjusting entries at December 31

Homework Answers

Answer #1

Journal entry :

Date accounts & explanation debit credit
Sept 1 Purchase 50250
Account payable 50250
Oct 1 Account payable 50250
Notes payable 50250
Oct 1 Cash 91220
Discount on bonds payable 6360
Notes payable 97580

Adjusting entry :

Date accounts & explanation debit credit
Dec 31 Interest expense (50250*8%*3/12) 1005
Interest payable 1005
Dec 31 Interest expense (6360*3/12) 1590
Discount on notes payable 1590
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