Question

Exercise 13-2 The following are selected 2017 transactions of Flint Corporation. Sept. 1 Purchased inventory from Encino Company on account for $39,400. Flint records purchases gross and uses a periodic inventory system. Oct. 1 Issued a $39,400, 12-month, 8% note to Encino in payment of account. Oct. 1 Borrowed $39,400 from the Shore Bank by signing a 12-month, zero-interest-bearing $42,720 note.

Prepare journal entries for the selected transactions above. (If no entry is required, select "No Entry" for the account titles and enter 0 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 September 1October 1 September 1October 1 October 1 SHOW LIST OF ACCOUNTS LINK TO TEXT

Prepare adjusting entries at December 31. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,125.) Date Account Titles and Explanation Debit Credit December 31 (To record interest on the note) December 31 (To record discount on the note) SHOW LIST OF ACCOUNTS LINK TO TEXT

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 $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

Gneral Journal- Flint Corporation
Date	Accoutn Tittle	Debit	Credit
1-Sep	Purchases	$39,400.00
	Accounts Payable- Encino Company		$39,400.00
1-Oct	Accounts Payable- Encino Company	$39,400.00
	Notes Payable		$39,400.00
1-Oct	Cash	$39,400.00
	Discount On Notes Payable (bal)	$3,320.00
	Notes Payable		$42,720.00
Adjusting Entries
31-Dec	Interest Expense (39400*8%*3/12)	$788.00
	Interest Payable		$788.00
	T Record Interest on Note Payable
31-Dec	Interest Expense (3320/12*3)	$830.00
	Discount On Notes Payable		$830.00
	TO Record Interest on Note

Computation of Net Total liability
The Interest-Bearing Note (39400+788)	40,188.00
The Zero-Interest-Bearing Note (42720-3320+830)	40,230.00