Ilustration Accounts and Notes Payable The following are sel

Ilustration: (Accounts and Notes Payable) The following are selected 2014 transactions of Darby Corporation. Sept. 1- Purchased inventory from Orion Company on account for $50,000. Darby records purchases gross and uses a periodic inventory system. Oct. 1-Issued a $50,000, 12-month, 8% note to Orion in payment of account. Oct. 1 - Borowed $75,000 from the Shore Bank by signing a 12-month, zero-interest-bearing $81,000 note Prepare journal entries for the selected transactions

Solution

Answer

Date

Particulars

Dr. $

Cr. $

Sept. 1

Purchases

50,000

50,000

(Being goods purchased on credit)

Oct. 1

Accounts Payable(Orion Company)

50,000

8% Notes Payable

50,000

(Being 8% Notes issued to Accounts Payable)

Oct. 1

Cash

75,000

Discount on Notes Payable

6,000

Notes Payable

81,000

(Being sum borrowed from bank and issued discounted Note)

Date	Particulars	Dr. $	Cr. $
Sept. 1	Purchases	50,000
	Accounts Payable (Orion Company)		50,000
	(Being goods purchased on credit)
Oct. 1	Accounts Payable(Orion Company)	50,000
	8% Notes Payable		50,000
	(Being 8% Notes issued to Accounts Payable)
Oct. 1	Cash	75,000
	Discount on Notes Payable	6,000
	Notes Payable		81,000
	(Being sum borrowed from bank and issued discounted Note)