Question
Exercise 1 The following are selected 2016 transactions of Amador Corporation. Sept. 1 Purchased inventory from Attiq Company on account for $125,000. Amador records purchases
Exercise 1
The following are selected 2016 transactions of Amador Corporation.
Sept. 1 Purchased inventory from Attiq Company on account for $125,000. Amador records purchases gross and uses a periodic inventory system.
Oct. 1 Issued a $125,000, 12-month, 12% note to Attiq in payment of account.
Oct. 1 Borrowed $125,000 from the Alkhawri Bank by signing a 12-month, zero-interest-bearing $142,000 note.
Instructions
Prepare journal entries for the selected transactions above.
Prepare adjusting entries at December 31. (Use straight-line amortization of the discount.)
Compute the total net liability to be reported on the December 31 balance sheet for:
the interest-bearing note.
the zero-interest-bearing note. (Use straight-line amortization.)
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