E13-2B (L01) (Accounts and Notes Payable) The following are selected 2017 transactions of Palmieri Corporation. Sept....

E13-2B (L01) (Accounts and Notes Payable) The following are selected 2017 transactions of Palmieri Corporation.

Sept. 1 Purchased inventory from Ripken Company on account for $125,000. Palmieri records purchases gross and uses a periodic inventory system. Oct. 1 Issued a $125,000, 12-month, 12% note to Ripken in payment of account. Oct. 1 Borrowed $125,000 from the Shore Bank by signing a 12-month, zero-interest-bearing $142,000 note.

Instructions (a) Prepare journal entries for the selected transactions above. (b) Prepare adjusting entries at December 31. (Use straight-line amortization of the discount.) (c) Compute the total net liability to be reported on the December 31 balance sheet for: (1) the interest-bearing note. (2) the zero-interest-bearing note. (Use straight-line amortization.

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