Journal and Adjusting Entries

1. Congo Corporation uses a periodic inventory system and the gross method of accounting for
purchase discounts. On July 1, Congo purchased $40,000 of inventory, terms 2/10, n/30, FOB shipping point. Congo paid freight costs of $1,200. On July 3, Congo returned damaged goods and received credit of $6,000. On July 10, Congo paid for the goods. Prepare all necessary journal entries for Congo.

2. Peloton Company borrowed $50,000 on November 1, 2007, by signing a $50,000, 9%, 3-month note. Prepare Peloton's November 1, 2007, entry; the December 31, 2007, annual adjusting entry; and the February 1, 2008, entry