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Accounting Project

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Accounting – Assignment 1 Question 1 | |
The following are selected 2011 transactions of Darby Corporation. Sept. 1 | | Purchased inventory from Orion Company on account for $53,800. Darby records purchases gross and uses a periodic inventory system. | Oct. 1 | | Issued a $53,800, 12-month, 9% note to Orion in payment of Darby’s account. | 1 | | Borrowed $77,600 from the bank by signing a 12-month, non—interest—bearing $81,900 note |

Prepare journal entries for each transaction Date | | Account Titles | | Debit | | Credit | Sept. 1 | | Purchases | | 53,800 | | | | | | Accounts Payable | | | | 53,800 | | Oct. 1 | | Accounts Payable | | 53,800 | | | | | | Notes Payable | | | | 53,800 | | Oct. 1 | | Cash | | 77,600 | | | | | | Notes Payable | | | | 77,600 |

Prepare adjusting entries at December 31, 2011 Date | | Account Titles | | Debit | | Credit | Dec. 31 | | Interest Expense | | 1,211 | | | | | | Interest Payable ($53,800 × 9% × 3/12) | | | | 1211 | | Dec. 31 | | Interest Expense | | 1075 | | | | | | Notes Payable [($81,900 − $77,600) × 3/12] | | | | 1075 |

Calculate the net liability, in total, to be reported on the December 31, 2011 balance sheet for the following

Note payable | | $ | 53,800 | Interest payable | | | 1,211 | | | $ | 55,011 | | Note payable | | $ | 77,600 | Interest accrued | | | 1,075 | | | $ | 78,675 |

Prepare the journal entries for the payment of the notes at maturity Date | | Account Titles | | Debit | | Credit | Orion Note: | Oct. 1/12 | | Note Payable | | 53800 | | | | | Interest Expense ($53,800 × 9% × 9/12) | | 3,632 | | | | | Interest Payable | | 1,211 | | | | | | Cash | |…...

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