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 $70,000 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 from General Motors Company, paying $4,000 in cash and signing a one-year, 12% note for the balance of the purchase price.3. On May 1, the corporation borrowed $83,000 from Chicago National Bank by signing a $92,000 zero-interest-bearing note due one year from May 1.4. 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.Make all the journal entries necessary to record the transactions above using appropriate dates. Edwardson Corporation

Edwardson Corporation

Journal Entries:

February 2:

Debit Purchases $68,600

Credit Accounts Payable $68,600

To record credit purchases, net ($70,000 * 98%) with terms of 2/10, n/30.

February 26: Debit Purchases $1,400

Credit Accounts Payable $1,400

To revise the cash discounts not taken.

February 26: Debit Accounts Payable $70,000

Credit Cash $70,000

To record the full settlement for cash

April 1: Debit Truck $50,000

Credit Cash $4,000

Credit Notes Payable $46,000

To record the purchase of truck with a 12% note.

May 1: Debit Cash $83,000

Debit Interest Expense $9,000

Credit Notes Payable $92,000

To record zero-interest-bearing note due on May 1.

August 1: Debit Dividends $300,000

Credit Dividends Payable $300,000

To record the declaration of dividends.

Explanation:

a) Data and Analysis:

February 2: Purchases $68,600 Accounts Payable $68,600 ($70,000 * 98%)

February 26: Purchases $1,400 Accounts Payable $1,400

Accounts Payable $70,000 Cash $70,000

April 1: Truck $50,000 Cash $4,000 Notes Payable $46,000

May 1: Cash $83,000 Interest Expense $9,000 Notes Payable $92,000

August 1: Dividends $300,000 Dividends Payable $300,000

b) Note that the Interest Expense of $9,000 will be split between the current year and the following year.  Specific information for the split is not available.

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