Question

The following are selected 2020 transactions of Buffalo Corporation.

Sept. 1		Purchased inventory from Encino Company on account for $37,400. Buffalo records purchases gross and uses a periodic inventory system.
Oct. 1		Issued a $37,400, 12-month, 8% note to Encino in payment of account.
Oct. 1		Borrowed $37,400 from the Shore Bank by signing a 12-month, zero-interest-bearing $40,800 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
choose a transaction date                                                                      September 1October 1	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
choose a transaction date                                                                      September 1October 1	enter an account title	enter a debit amount	enter a credit amount
	enter an account title	enter a debit amount	enter a credit amount
October 1	enter an account title to record the transaction on October 1	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on October 1	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on October 1	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

  

  

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	enter an account title to record interest on the note on December 31	enter a debit amount	enter a credit amount
	enter an account title to record interest on the note on December 31	enter a debit amount	enter a credit amount
	(To record interest on the note)
December 31	enter an account title to record discount on the note on December 31	enter a debit amount	enter a credit amount
	enter an account title to record discount on the note on December 31	enter a debit amount	enter a credit amount
	(To record discount on the note)

eTextbook and Media

List of Accounts

  

  

Compute the total net liability to be reported on the December 31 balance sheet for:

(1)		The interest-bearing note		$enter a dollar amount
(2)		The zero-interest-bearing note		$enter a dollar amount

Answer 1