Rescue Sequences LLC purchased inventory by issuing a $30,000, 60-day, non-interest bearing note on October 1. Assume that the note is discounted at a 15% rate. Required: Prepare the journal entries for Rescue Sequences to record the purchase and payment assuming it uses a perpetual inventory system and a 360-day calendar fiscal year. ### Journal Entries#### Date: October 1- **Account Title: Inventory** - Debit: 750.00- **Account Title: Discount on Notes Payable** - Debit: 29,250.00- **Account Title: Notes Payable** - Credit: 30,000.00#### Date: December 1- **Account Title: Interest Expense** - Debit: 750.00- **Account Title: Discount on Notes Payable** - Credit: 750.00#### Date: December 1- **Account Title: Notes Payable** - Debit: 29,250.00- **Account Title: Cash** - Credit: 29,250.00Each entry is marked with a checkmark under the “Post. Ref.” column, indicating that these entries have been posted to the ledger. - The transactions involve accounts such as Inventory, Notes Payable, and Cash.- Discounts and interest expense are recorded with clear debit and credit allocations to reflect financial activities accurately.

Answered: Rescue Sequences LLC purchased…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Rescue Sequences LLC purchased inventory by issuing a $30,000, 60-day, non-interest bearing note on October 1. Assume that the note is discounted at a 15% rate.

	Required:
	Prepare the journal entries for Rescue Sequences to record the purchase and payment assuming it uses a perpetual inventory system and a 360-day calendar fiscal year.

### Journal Entries

#### Date: October 1
- **Account Title: Inventory**
- Debit: 750.00
- **Account Title: Discount on Notes Payable**
- Debit: 29,250.00
- **Account Title: Notes Payable**
- Credit: 30,000.00

#### Date: December 1
- **Account Title: Interest Expense**
- Debit: 750.00
- **Account Title: Discount on Notes Payable**
- Credit: 750.00

#### Date: December 1
- **Account Title: Notes Payable**
- Debit: 29,250.00
- **Account Title: Cash**
- Credit: 29,250.00

Each entry is marked with a checkmark under the “Post. Ref.” column, indicating that these entries have been posted to the ledger.

- The transactions involve accounts such as Inventory, Notes Payable, and Cash.
- Discounts and interest expense are recorded with clear debit and credit allocations to reflect financial activities accurately.

Expert Solution

Step 1

Solution:

Face amount of note = $30,000

Discount rate = 15%

Discount amount of note = $30,000*15%*60/360 = $750

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