Monte Cristo Products, which uses a perpetual inventory system, owed $770,000 on account for inventory purchased on
Question:
Monte Cristo Products, which uses a perpetual inventory system, owed $770,000 on account for inventory purchased on November 1, 2020. The company'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, 2021, it signed a $770,000, 12% interest-bearing note. This note was repaid with interest on September 1, 2021.
Required:
1. Prepare the entry recorded on November 1, 2020.
2. Prepare the adjusting entry recorded on December 31, 2020.
3. Prepare the entry recorded on February 1, 2021.
4. Prepare the entry recorded on September 1, 2021.
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Step by Step Answer:
Date Account Debit Credit 12020 216000 Nov1 Inventory 77...View the full answer
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