Exercise 13-2 The following are selected 2017 transactions of Sheridan Corporati

Question

Exercise 13-2 The following are selected 2017 transactions of Sheridan Corporation. Sept. 1 Purchased inventory from Encino Company on account for $59,400. Sheridan records purchases gross and uses a periodic inventory system. Oct. 1 Issued a $59,400, 12-month, 8% note to Encino in payment of account. Oct. 1 Borrowed $59,400 from the Shore Bank by signing a 12-month, zero-interest-bearing $62,520 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 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 $

Explanation / Answer

a 1-Sep Purchases 59400        Accounts Payable 59400 1-Oct Accounts Payable 59400       Notes Payable 59400 1-Oct Cash 59400 Discount on Notes Payable 3120       Notes Payable 62520 b 31-Dec Interest Expense 1188 =59400*8%/12*3      Interest Payable 1188 31-Dec Interest Expense 780 =3120/12*3       Discount on Notes Payable 780 c(1) Note payable 59400 Interest payable 1188 Total net liability 60588 c(2) Note payable 62520 Less: Discount 2340 =3120-780 Total net liability 60180

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