The following are selected 2023 transactions of Darby Corporation.

Sept. 1 Purchased inventory from Orion Ltd. on account for $50,000. Darby uses a periodic inventory system.

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

1 Borrowed $75,000 from the bank by signing a 12-month, non–interest-bearing $81,000 note.

Instructions

a. Prepare journal entries for the selected transactions above.

b. Prepare adjusting entries at December 31, 2023.

c. Calculate the net liability, in total, to be reported on the December 31, 2023 SFP for

(1) The interest-bearing note and

(2) The non–interest-bearing note.