The following are selected 2020 transactions of Astin Corporation. Sept. 1 Purchased inventory from Encino Company on

Question:

The following are selected 2020 transactions of Astin Corporation.

Sept. 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. 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.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...