PROBLEMS

p$13-1($L$01)$ GROUPWORK $($Current Liability Entries and Adjustments$)$ Described below are certain transactions of

Edwardson Corporation. The company uses the periodic inventory system.

On February $2,$ the corporation purchased goods from Martin Company for $$70,000$ subject to cash discount terms of $\frac{2}{10},$

$\frac{n}{30}.$ Purchases and accounts payable are recorded by the corporation at net amounts after cash discounts. The invoice

was paid on February $26.$

On April $1,$ the corporation bought a truck for $$50,000$ from General Motors Company, paying $$4,000$ in cash and signing

a $1-$year, $12\%$ note for the balance of the purchase price.

On May $1,$ the corporation borrowed $$83,000$ from Chicago National Bank by signing a $$92,000$ zero$-$interest$-$bearing note

due $1$ year from May $1.$

On August $1,$ the board of directors declared a $$300,000$ cash dividend that was payable on September $10$ to stockholders

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 $31.$ Assume straight$-$line amortization of discounts.