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
This solution contains journal entries for the Congo and Pelton Companies that details their purchases, purchase discount and return, cash, interest expense, and notes payable.