The following are selected 2014 transactions of Sean Astin Corporation.

| June 1, 2016

Question
The following are selected 2014 transactions of Sean Astin Corporation.

E13-2 (Accounts and Notes Payable) The following are selected 2014 transactions of Sean Astin Corporation.

Sep 1 Purchased inventory from Encino Company on account for $50,000 Astin records purchases gross and uses a periodic inventory system

Oct 1 Issued a $50,000 12-month, 8% note to Encino in payment of account.

Oct 1 Borrowed $50,000 from the Shore Bank by signing a 12-month, zero-interest- bearing $54,000 note

Instructions

(a) Prepare journal entries for the selected transactions above.

(b) Prepare adjusting entries at December 31.

(c) (1) Compute the total net liability to be reported on the December 31 balance sheet for the interest- bearing note.

(c) (2)Compute the total net liability to be reported on the December 31 balance sheet for the zero-interest-bearing note.

SOLUTION PREVIEW

(a) Prepare journal entries for the selected transactions above.

Sep 1

Purchases

50,000

Accounts Payable

50,000

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