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Accounts and Notes Payable the following are selected 2010 transactions of Darby Corporation.
Sept. 1 Purchased inventory from Orion Company on account for $50,000. Darby records purchases gross and uses a periodic inventory system.Oct. 1 Issued a $50,000, 12-month, 8% note to Orion in payment of account.Oct. 1 Borrowed $75,000 from the Shore Bank by signing a 12-month, zero-interest-bearing $81,000 note.
(a) Prepare journal entries for the selected transactions above.
(b) Prepare adjusting entries at December 31.
(c) Compute the total net liability to be reported on the December 31 balance sheet for:
(1) The interest-bearing note.
(2) The zero-interest-bearing note.
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