Question

The following are selected 2017 transactions of Blue Corporation. Sept. 1 Purchased inventory from Encino Company on account for $44,800. Blue records purchases gross and uses a periodic inventory system. Oct. 1 Issued a $44,800, 12-month, 8% note to Encino in payment of account. Oct. 1 Borrowed $44,800 from the Shore Bank by signing a 12-month, zero-interest-bearing $49,760 note. Prepare the necessary journal entries: g

Answer 1

Sept 1

Dr Purchase $44,800

Cr Account payable $44,800

Oct 1

Dr Account payable $44,800

Cr Note payable $44,800

Oct 1

Dr Cash $44,800

Dr Discount on note payable $4,960

Dr Note payable $49,760

Step-by-step explanation:

Blue Corporation Journal entry

Sept 1

Dr Purchase $44,800

Cr Account payable $44,800

Oct 1

Dr Account payable $44,800

Cr Note payable $44,800

Oct 1

Dr Cash $44,800

Dr Discount on note payable $4,960

($49,760-$44,800)

Dr Note payable $49,760