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P$12\mathrm{.}1$B Modified $($LO $1)($Current Liability Entries and Adjustments$)$ Described below are certain

transactions of Shark Company. The company uses the periodic inventory system. Assume that the

market rate of interest for liabilities with a similar risk to Shark Company is $8\%.$

On March $10,$ the company purchased goods from Bait Company for $$42,000$ subject to cash

discount terms of $\frac{1}{10},\frac{n}{30}.$ Purchases and accounts payable are recorded by the company at

gross amounts. The invoice was paid on March $19.$

On April $1,$ the company borrowed $$184,979\mathrm{.}66$ from Omega National Bank by signing a

$$200,000$ zero$-$interest$-$bearing note due one year from April $1.$

On June $30,$ the company bought a fishing boat for $$40,000$ from Open Water Corporation,

paying $$6,000$ in cash and signing a two$-$year, $8\%$ note for the balance of the purchase price.

Instructions

a$.$ Make all the journal entries necessary to record the transactions above using appropriate dates.

b$.$ Shark Company'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.

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