Question

The following are selected 2017 transactions of Flint Corporation, which has a calendar year end.

Sept. 1		Purchased inventory from Orion Company on account for $59,900. Flint uses a periodic inventory system and records purchases using the gross method of accounting for purchase discounts.
Oct. 1		Issued a $59,900, 12-month, 8% note to Orion in payment of Flint’s account.
1		Borrowed $79,800 from the bank by signing a 12-month, non–interest-bearing $80,700 note. Prepare the journal entries for the payment of the notes at maturity. Prepare the journal entries for the payment of the notes at maturity, assuming the company uses reversing entries. (Show the reversing entries at January 1, 2018.)

Answer 1

journal entries
date	explanation	debit	credit
1-Sep	purchase	59900
	accounts payable		59900
1-Oct	accounts payable	59900
	notes payable		59900
1-Oct	cash	79800
	discount on notes payable	900
	notes payable		80700
31-Dec	interest expense	1198
	interest payable		1198
31-Dec	interest expense	225
	discount on notes payable		225
oct 1 2018	notes payable	59900
	interest expense	3594
	interest payable	1198
	cash		64692
oct 1 2018	interest payable	675
	discount on notes payable		675
oct 1 2018	notes payable	80700
	cash		80700