The following are selected 20X2 transactions of Bishop Corporation.

Sept 1 Purchased inventory from Smith Company on account for $50,000. Smith records purchases gross and uses a periodic inventory system.

Oct 1 Issued a $50,000, 12-month, 8% interest-bearing note to Smith in payment of account.

Oct 1 Signed a zero-interest bearing 12-month note for $54,000 from the Second Bank and received $50,000.

Required:

a. Prepare journal entries for the selected transactions above.

b. Prepare adjusting journal entries at December 31.