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Prepare the adjusting entry recorded on december

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Question - Interest-Bearing Note Replacing an Unpaid Account Payable

Conti Products owed $80,000 on account for inventory purchased on December 1, 2018. Conti uses a perpetual inventory system and has a fiscal year that ends on December 31. Conti was unable to pay the amount owed by the March 1, 2019, due date because of financial difficulties. On March 1, 2019, Conti signed a four-month, $80,000, 6% interest-bearing note. This note was repaid with interest on July 1, 2019.

1. Prepare the entry recorded on December 1, 2018. (Record purchase of inventory on account)

2. Prepare the adjusting entry recorded on December 31, 2018. (Year-end adjustment)

3. Prepare the entry recorded on March 1, 2019. (Record issuance of note to cover unpaid account payable)

4. Prepare the entry recorded on July 1, 2019. (Record payment of note and interest.

Reference no: EM132488462

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