E12.2 (LO1) Accounts and Notes Payable
The following are selected 2025 transactions of Sean Astin Corporation.
Sep. 1 Purchased inventory from Encino Company on account. $ 50,000
Astin records purchases gross and uses a periodic
inventory system.
Oct. 1 Issued a note to Encino in payment of account.
Amount of note $ 50,000
Length of note 12 months
Interest rate 8%
Oct. 1 Borrowed cash from Shore Bank by signing a zero-interest-bearing note.
Amount of note $ 54,000
Amount of borrowing 50,000
Length of note 12 months
Interest rate 8%
Instructions
a. Prepare journal entries for the selected transactions above.
b. Prepare adjusting entries at December 31.
c. Compute the total net liability to be reported on the December 31 balance sheet for the
interest-bearing note.
1. The interest-bearing note
2. The zero-interest-bearing note
NOTE: Enter a formula, a cell reference, or a value (if you are unable to reference a cell),
into the yellow shaded input cells.
Debit Credit
a.
, Debit Credit
b.
c.
, Solution: E12.2 (LO1) Accounts and Notes Payable
The following are selected 2025 transactions of Sean Astin Corporation.
Sep. 1 Purchased inventory from Encino Company on account. $ 50,000
Astin records purchases gross and uses a periodic
inventory system.
Oct. 1 Issued a note to Encino in payment of account.
Amount of note $ 50,000
Length of note 12 months
Interest rate 8%
Oct. 1 Borrowed cash from Shore Bank by signing a zero-interest-bearing note.
Amount of note $ 54,000
Amount of borrowing 50,000
Length of note 12 months
Interest rate 8%
Instructions
a. Prepare journal entries for the selected transactions above.
b. Prepare adjusting entries at December 31.
c. Compute the total net liability to be reported on the December 31 balance sheet for the
interest-bearing note.
1. The interest-bearing note
2. The zero-interest-bearing note
NOTE: Enter a formula, a cell reference, or a value (if you are unable to reference a cell),
into the yellow shaded input cells.
Debit Credit
a. Sep. 1 Purchases 50,000
Accounts Payable 50,000
Oct. 1 Accounts Payable 50,000
Notes Payable 50,000
Oct. 1 Cash 50,000
Discount on Notes Payable 4,000
Notes Payable 54,000
The following are selected 2025 transactions of Sean Astin Corporation.
Sep. 1 Purchased inventory from Encino Company on account. $ 50,000
Astin records purchases gross and uses a periodic
inventory system.
Oct. 1 Issued a note to Encino in payment of account.
Amount of note $ 50,000
Length of note 12 months
Interest rate 8%
Oct. 1 Borrowed cash from Shore Bank by signing a zero-interest-bearing note.
Amount of note $ 54,000
Amount of borrowing 50,000
Length of note 12 months
Interest rate 8%
Instructions
a. Prepare journal entries for the selected transactions above.
b. Prepare adjusting entries at December 31.
c. Compute the total net liability to be reported on the December 31 balance sheet for the
interest-bearing note.
1. The interest-bearing note
2. The zero-interest-bearing note
NOTE: Enter a formula, a cell reference, or a value (if you are unable to reference a cell),
into the yellow shaded input cells.
Debit Credit
a.
, Debit Credit
b.
c.
, Solution: E12.2 (LO1) Accounts and Notes Payable
The following are selected 2025 transactions of Sean Astin Corporation.
Sep. 1 Purchased inventory from Encino Company on account. $ 50,000
Astin records purchases gross and uses a periodic
inventory system.
Oct. 1 Issued a note to Encino in payment of account.
Amount of note $ 50,000
Length of note 12 months
Interest rate 8%
Oct. 1 Borrowed cash from Shore Bank by signing a zero-interest-bearing note.
Amount of note $ 54,000
Amount of borrowing 50,000
Length of note 12 months
Interest rate 8%
Instructions
a. Prepare journal entries for the selected transactions above.
b. Prepare adjusting entries at December 31.
c. Compute the total net liability to be reported on the December 31 balance sheet for the
interest-bearing note.
1. The interest-bearing note
2. The zero-interest-bearing note
NOTE: Enter a formula, a cell reference, or a value (if you are unable to reference a cell),
into the yellow shaded input cells.
Debit Credit
a. Sep. 1 Purchases 50,000
Accounts Payable 50,000
Oct. 1 Accounts Payable 50,000
Notes Payable 50,000
Oct. 1 Cash 50,000
Discount on Notes Payable 4,000
Notes Payable 54,000
