July 15, 2021PCM purchases $12,000 supplies inventory on account. The terms offered are 2/10, net 30.

July 28, 2021PCM borrows $25,500 from the bank. PCM signs a demand note for this amount and authorizes the bank to take the interest payments from its bank account at the end of each month. Interest is payable monthly at 10% per annum.

Aug. 18, 2021PCM purchases $3,000 inventory on account. The terms offered are 2/10, net 30.

Aug. 21, 2021PCM purchases 22 pop machines and issues a $37,000 non-interest-bearing note payable due on Aug 21, 2022.

Aug. 22, 2021PCM pays the July. 15,2020 and Aug. 18,2020 invoices.

Other Info

SJL uses the gross method to record accounts payable.

SJL's year-end is Nov 30 and interim statements are normally prepared on a monthly basis.

SJLs last adjusting entries were completed June 30, 2021, due to staff shortage.

The market rate of interest for SJL's short-term borrowing is 10%.

Required:

a. Prepare journal entries to record the documented events and the necessary accruals for the months of July and August (depreciation not needed). Compute interest accruals based on the number of days, rather than months. Round up to the nearest dollar. (17 marks)