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Prepare adjusting journal entries concerning interest

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Reference no: EM131756017

Question: Described below are certain transactions of Edwardson Corporation. The company uses the periodic inventory system.

1. On February 2, the corporation purchased goods from Martin Company for euro70,000 subject to cash discount terms of 2/10, n/30. Purchases and accounts payable are recorded by the corporation at net amounts after cash discounts. The invoice was paid on February 26.

2. On April 1, the corporation bought a truck for 50,000, paying 4,000 in cash and signing a one-year, 12% note for the balance of the purchase price.

3. On August 1, the board of directors declared a 300,000 cash dividend that was payable on September 10 to shareholders of record on August 31.

Instructions: a. Make all the journal entries necessary to record the transactions above using appropriate dates.

b. Edwardson Corporation's year-end is December 31. Assuming that no adjusting entries relative to the transactions above have been recorded, prepare any adjusting journal entries concerning interest that are necessary to present fair financial statements at December 31.

Reference no: EM131756017

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