Described below are certain transactions of Indigo Corporation. The company uses the periodic inventory system. On February 2, the corporation purchased goods from Martin Company for $65,600 subject to cash discount terms of 2/10, n/30. Purchases and accounts payable are recorded by the corporation at net amounts after cash discounts. The invoice was paid on February 26. 1. 2. 3. 4. On April 1, the corporation bought a truck for $53,000 from General Motors Company, paying $4,000 in cash and signing a one-year, 10% note for the balance of the purchase price. On May 1, the corporation borrowed $79,400 from Chicago National Bank by signing a $88,040 zero-interest-bearing note due one year from May 1. On August 1, the board of directors declared a $324,800 cash dividend that was payable on September 10 to stockholders of record on August 31,
Described below are certain transactions of Indigo Corporation. The company uses the periodic inventory system. On February 2, the corporation purchased goods from Martin Company for $65,600 subject to cash discount terms of 2/10, n/30. Purchases and accounts payable are recorded by the corporation at net amounts after cash discounts. The invoice was paid on February 26. 1. 2. 3. 4. On April 1, the corporation bought a truck for $53,000 from General Motors Company, paying $4,000 in cash and signing a one-year, 10% note for the balance of the purchase price. On May 1, the corporation borrowed $79,400 from Chicago National Bank by signing a $88,040 zero-interest-bearing note due one year from May 1. On August 1, the board of directors declared a $324,800 cash dividend that was payable on September 10 to stockholders of record on August 31,
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Described below are certain transactions of Indigo Corporation. The company uses the periodic inventory system.
On February 2, the corporation purchased goods from Martin Company for $65,600 subject to cash discount terms of 2/10,
n/30. Purchases and accounts payable are recorded by the corporation at net amounts after cash discounts. The invoice was
paid on February 26.
1.
2.
3.
4.
On April 1, the corporation bought a truck for $53,000 from General Motors Company, paying $4,000 in cash and signing a
one-year, 10% note for the balance of the purchase price.
On May 1, the corporation borrowed $79,400 from Chicago National Bank by signing a $88,040 zero-interest-bearing note
due one year from May 1.
On August 1, the board of directors declared a $324,800 cash dividend that was payable on September 10 to stockholders of
record on August 31.
Transcribed Image Text:Indigo Corporation's year-end is December 31. Assuming that no adjusting entries relative to the transactions above have been
recorded, prepare any adjusting journal entries concerning interest that are necessary to present fair financial statements at
December 31. Assume straight-line amortization of discounts. (If no entry is required, select "No Entry" for the account titles and enter
O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries
in the order presented in the problem.)
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