Accrued Liabilities}

Thornwood Tile had the following items that require adjusting entries at the end of the year.

a. Thornwood pays payroll of \(\$ 180,000\) every other Friday for a two-week period. This year the last payday is Friday, December 26. (Note: The work week is Monday through Friday.)

b. Thornwood purchased \(\$ 350,000\) of tile on June 1 with a note payable requiring \(12 \%\) interest. The interest and principal on this note are due within one year. As of December 31, Thornwood had not made any principal or interest payments.

c. Thornwood's earned income is \(\$ 900,000\) for the year for tax purposes. Its effective tax rate is \(30 \%\). These taxes must be paid by February 28 of next year.

\section*{Required:}

Prepare the adjusting journal entries to record these transactions at the end of the current year.

\section*{OBJECTIVE 2}

\section*{Exercise