Interest-Bearing Note Replacing an Unpaid Account Payable

Rasputin Manufacturing owed $50,000 on account for inventory purchased on December 1, 2018. Rasputin uses a perpetual inventory system and the fiscal year ends on December 31. Rasputin was unable to pay the amount owed by the February 28 due date because of financial difficulties. On March 1, 2019, Rasputin signed a $50,000, 10.4% interest-bearing note. This note was repaid with interest on September 1, 2019.

Required:

If no entry is required, type "No entry required" and leave the amount boxes blank.

1. Prepare the entry recorded on December 1, 2018. (Record purchase of inventory on account)

2. Prepare the adjusting entry recorded on December 31, 2018. (Year end adjustment)

3. Prepare the entry recorded on March 1, 2019.

(Record issuance of note to cover unpaid account payable)

4. Prepare the entry recorded on September 1, 2019. For those boxes in which no entry is required, leave the box blank. If required, round your answers to the nearest dollar.

(Record payment of note and interest)