The following are selected 2008 transactions of Sean Astin Corporation. Sept. 1 Purchased inventory from Encino Company

Question:

The following are selected 2008 transactions of Sean 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, 12% note to Encino in payment of account.

Oct. 1 Borrowed $50,000 from the Shore Bank by signing a 12-month, zero-interest-bearing $56,000 note.

Instructions

(a) Prepare journal entries for the selected transactions above.

(b) Prepare adjusting entries at December 31.

(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...