1. Rachel was recently hired by Moncton Express Inc (MEI) to assist its payable clerk in bringing the accounts up to date. Rachel was asked to record the following transactions:

August 15: MEI purchased a new inventory monitoring system. MEI issued a $6,000 non-interest bearing note payable, due on October 15.

August 18: MEI borrowed $10,000 from the bank in the form of a demand note. MEI authorizes the bank to take the interest payments from its bank account. Interest is payable on the last day of each month at 4% per annum.

August 21: MEI purchased $8,000 of inventory, plus HST, on account. The terms offered are 3/10, net 45.

September 20: MEI purchased a waste management system. MEI issues an $8,000, non-interest bearing note payable due in one year.

September 23: MEI purchases $3,000 of inventory, plus HST, on account. The terms offered are 3/10, net 45.

September 24: Rachel pays the August 21 and September 23 invoices.

September 30: Rachel accrues for unbilled utilities totalling $1,700.

Other information:

• MEI uses the gross method to record accounts payable
• MEIs year-end is December 31, and interim statements are normally prepared on a monthly basis.
• MEIs latest interim statements are for the month ended July 31. The necessary accruals were made at that time, except that MEI only records depreciation expense at year-end.
• The market rate of interest for MEIs short-term borrowings is 5%.

Required:

Prepare journal entries to record the documented events and the necessary accruals for the months of August and September. Calculate interest accruals based on the number of days, rather than months. Round your answers to the nearest dollar.