Question

The following are selected 2020 transactions of Teal Corporation. Sept. Purchased inventory from Encino Company on account for $40,200. Teal records purchases gross and uses a periodic inventory system. 1 Oct. Issued a $40,200, 12-month, 8 % note to Encino in payment of account. Oct. Borrowed $40,200 from the Shore Bank by signing a 12-month, zero-interest-bearing $44,240 note. 1 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) Account Titles and Explanation Date Debit Credit September 1 Inventory 40200 Accounts Payable October 1

Answer 1

Journal Entries
Date	Account Title and explanation	Debit	Credit
September , 01	Inventory	$                  40,200
	Account Payable - Encino Company		$                     40,200
October, 01	Account Payable - Encino Company	$                  40,200
	Note Payable		$                     40,200
October, 01	Cash	$                  40,200
	Discount on note Payable	$                     4,040
	Note Payable (Zero interest)		$                     44,240
December, 31	Interest Expenses ($ 40,200 X 8% X 3/12)	$                        804
	Interest Payable		$                           804
	(Record the interest on the note)
December, 31	Interest Expenses ($ 4,040 X 3/12)	$                     1,010
	Discount on note Payable		$                       1,010
	(Record the discount on the note)