Question

Exercise 13-02 The following are selected 2020 transactions of Astin Corporation. Sept. 1 Oct. 1 Oct. 1 Purchased inventory from Encino Company on account for $50,000. Astin records purchases gross and uses a periodic inventory system. Issued a $50,000, 12-month, 8% note to Encino in payment of account. Borrowed $50,000 from the Shore Bank by signing a 12-month, zero-interest-bearing $54,000 note. Prepare journal entries for the selected transactions above. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record entries in the order displayed in the problem statement.) Date Account Titles and Explanation Debit Credit October 1

Answer 1

Part A

Date	General journal	Debit	Credit
Sept. 1	Purchases	50000
	Accounts Payable		50000
Oct. 1	Accounts Payable	50000
	Notes Payable		50000
Oct. 1	Cash	50000
	Discount on Notes Payable (54000-50000)	4000
	Notes Payable		54000

Part B

Date	General journal	Debit	Credit
Dec. 31	Interest expense (50000*8%*3/12)	1000
	Interest payable		1000
	(to record interest on the note)
Dec. 31	Interest expense (4000*3/12)	1000
	Discount on notes payable		1000
	(to record discount on the note)

Part C

The interest bearing note	$51000
The zero-interest bearing note	$51000

Notes payable	50000
Interest payable	1000
	$51000

Notes payable	54000
Less: Discount	3000
	$51000