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Compute the total net liability

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Reference no: EM13257162

The following areselected 2007 transactions of Sean Astin Corporation.

Sept. 1

Purchased inventory fromEncino Company on account for $50,000. Astin records purchasesgross 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 theShore Bank by signing a 12-month, zero-interest-bearing $54,000note.

Instructions:

(a) Prepare journal entries for the selectedtransactions above. (For multiple debit/credit entries,list in order of magnitude.)

(b) Prepare adjusting entries at December31.

1. the interest-bearing note.

2. the non-interest-bearing note.

(c) Compute the total net liability to be reported on the December 31 balance sheet for:

  1. the interest-bearing note.
  2. the non-interest-bearing note.

Reference no: EM13257162

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