during the fiscal year ended december 31 swanson corporation en 244762

During the fiscal year ended December 31, Swanson Corporation engaged in the following transactions involving notes payable:

Aug. 6 Borrowed $12,000 from Maple Grove Bank, signing a 45-day, 12 percent note payable.

Sept. 16 Purchased office equipment from Seawald Equipment. The invoice amount was $18,000, and Seawald agreed to accept, as full payment, a 10 percent, three-month note for the invoice amount.

Sept. 20 Paid Maple Grove Bank the note plus accrued interest.

Nov. 1 Borrowed $250,000 from Mike Swanson, a major corporate stockholder. The corporation issued Swanson a $250,000, 15 percent, 90-day note payable.

Dec. 1 Purchased merchandise inventory in the amount of $5,000 from Gathman Corporation. Gathman accepted a 90-day, 14 percent note as full settlement of the purchase. Swanson Corporation uses a perpetual inventory system.

Dec. 16 The $18,000 note payable to Seawald Equipment matured today. Swanson paid the accrued interest on this note and issued a new 30-day, 16 percent note payable in the amount of $18,000 to replace the note that matured.

Instructions

a. Prepare journal entries (in general journal form) to record the above transactions. Use a 360-day year in making the interest calculations.

b. Prepare the adjusting entry needed at December 31, prior to closing the accounts. Use one entry for all three notes.

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