The following are selected 2014 transactions of Sean Astin Corporation:
Sept. 1, Purchased inventory from Encino Company on account for $59,150. Astin records purchases gross and uses a periodic inventory system.
Oct. 1, Issued a $59,150, 12-month, 8% note to Encino in payment of account.
Oct. 1, Borrowed $91,620 from the Shore Bank by signing a 12-month, zero-interest-bearing $98,380 note.
Prepare journal entries for the selected transactions above:
Prepare adjusting entries at December 31:
Compute the total net liability to be reported on the December 31st balance sheet for:
1) the interest bearing note:
2) the zero interest bearing note: