The following transactions of Econo Auto Service occurred during 19X4 and 19X5.

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Record the transactions in the company's general journal. Explanations are not required. 19X4 Jan. 9 Purchased a machine at a cost of \(\$ 5,000\), signing an 8 -percent, six-month note payable for that amount.

29 Recorded the week's sales of \(\$ 22,200\), three-fourths on credit, and one-fourth for cash. Sales amounts are subject to an additional 6-percent state sales tax.

Feb. 5 Sent the last week's sales tax to the state.

28 Borrowed \(\$ 200,000\) on a 9 -percent note payable that calls for annual installment payments of \(\$ 50,000\) principal plus interest.

Apr. 8 Received \(\$ 1,427\) in deposits from distributors of company products. Econo refunds the deposits after six months.

July 9 Paid the six-month, 8-percent note at maturity.

Oct. 8 Refunded security deposits to distributors.

22 Discounted a \(\$ 5,000,7\)-percent, 90 -day note payable to the bank, receiving cash for the net amount after interest was deducted from the note's maturity value.

Nov. 30 Purchased inventory for \(\$ 3,100\), signing a six-month, 10 -percent note payable.

Dec. 31 Accrued warranty expense, which is estimated at 3 percent of sales of \(\$ 650,000\).

31 Accrued interest on all outstanding notes payable. Made a separate interest accrual entry for each note payable.

19X5 Jan. 20 Paid off the 7 -percent discounted note payable. Made a separate entry for the interest.

Feb. 28 Paid the first installment and interest for one year on the long-term note payable.

May 31 Paid off the 10 -percent note plus interest on maturity.

Identifying contingent liabilities

(Obj. 2)