Notes Payable
Response to the following problem:
On December 1, 2010, Insto Photo Company purchased merchandise, invoice price $25,000, and issued a 12%, 120-day note to Ringo Chemicals Company. Insto uses the calendar year as its fiscal year and uses the perpetual inventory system.
Required
Prepare journal entries on Insto Photo's books to record the preceding information, including the adjusting entry at the end of the year and payment of the note at maturity.