Answered: The following are selected 2020…

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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The following are selected 2020 transactions of Blue Corporation.

Sept. 1		Purchased inventory from Encino Company on account for $ 46,400. Blue records purchases gross and uses a periodic inventory system.
Oct. 1		Issued a $ 46,400, 12-month, 8% note to Encino in payment of account.
Oct. 1		Borrowed $ 46,400 from the Shore Bank by signing a 12-month, zero-interest-bearing $ 49,560 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.)

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.)

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		$

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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