Question: Monte Cristo Products which uses a perpetual inventory system owed

Monte Cristo Products, which uses a perpetual inventory system, owed $770,000 on account for inventory purchased on November 1, 2012. Monte Cristo’s fiscal year ends on December 31. Monte Cristo was unable to pay the amount owed by the February 1 due date because of financial difficulties. On February 1, 2013, Monte Cristo signed a $770,000, 12 percent interest-bearing note. This note was repaid with interest on September 1, 2013.

Required:
1. Prepare the entry recorded on November 1, 2012.
2. Prepare the adjusting entry recorded on December 31, 2012.
3. Prepare the entry recorded on February 1, 2013.
4. Prepare the entry recorded on September 1, 2013.

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  • CreatedSeptember 22, 2015
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