The following are selected 2017 transactions for Darby Corporation Sept. 1 Purchased inventory from Orion Ltd. on account for $50,000. Darby uses a periodic inventory system and records purchases using the gross method of accounting for purchase discounts.

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

Oct. 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, 2017.

c) Calculate the net liability, in total, to be reported on the December 31, 2017 statement of financial position for (1) the interest-bearing note, and (2) the non-interest-bearing note.