urnalize the adjusting entry for each of the following accrued expenses at the end of the current year: Product warranty cost, $80,000.
PR 10-1A Liability transactions
The following items were selected from among the transactions completed by Sherwood Co. during the current year:
|Mar. 1||Purchased merchandise on account from Kirkwood Co., $175,000, terms n/30.|
|31||Issued a 30-day, 6% note for $175,000 to Kirkwood Co., on account.|
|Apr. 30||Paid Kirkwood Co. the amount owed on the note of March 31.|
|June 1||Borrowed $400,000 from Triple Creek Bank, issuing a 45-day, 5% note.|
|July 1||Purchased tools by issuing a $45,000, 60-day note to Poulin Co., which discounted the note at the rate of 7%.|
|16||Paid Triple Creek Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6% note for $400,000. (Journalize both the debit and credit to the notes payable account.)|
|Aug. 15||Paid Triple Creek Bank the amount due on the note of July 16.|
|30||Paid Poulin Co. the amount due on the note of July 1.|
|Dec. 1||Purchased equipment from Greenwood Co. for $260,000, paying $40,000 cash and issuing a series of ten 9% notes for $22,000 each, coming due at 30-day intervals.|
|22||Settled a product liability lawsuit with a customer for $50,000, payable in January. Accrued the loss in a litigation claims payable account.|
|31||Paid the amount due to Greenwood Co. on the first note in the series issued on December 1.|
- Journalize the transactions.
- Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:
- Product warranty cost, $80,000.
- Interest on the nine remaining notes owed to Greenwood Co.