ACC $110-$ Principles of Accounting II

Assignment Problem $10-1$A: Liability Transactions

The following items were selected from among the transactions completed by Sherwood Co$.$ during the current year:

$\backslash$table$[[$Mar$.,1.,$Purchased merchandise on account from Kirkwood Co$.,$ $$215,000,$ terms n$/30.],[,31.,$Issued a $30-$day, $6\%$ note for $$215,000$ to Kirkwood Co$.,$ on account.$],[$Apr$.,30.,$Paid Kirkwood Co$.$ the amount owed on the note of March $31.],[$June$,1.,$Borrowed $$400,000$ from Triple Creek Bank, issuing a $45-$day, $8\%$ note.$],[$July$,1.,\backslash$table$[[$Purchased tools by issuing a $$60,000,60-$day note to Poulin Co$.,$ which discounted the$],[$note at the rate of $6\%.]]],[16.,\backslash$table$[[$Paid Triple Creek Bank the interest due on the note of June $1$ and renewed the loan by$],[$issuing a new $30-$day, $9\%$ note for $$400,000.($Journalize both the debit and credit to the$],[$notes payable account.$)]]],[$Aug$.,15.,$Paid Triple Creek Bank the amount due on the note of July $16.],[30.,$Paid Poulin Co$.$ the amount due on the note of July $1.],[$Dec$.,1.,\backslash$table$[[$Purchased equipment from Greenwood Co$.$ for $$320,000,$ paying $$120,000$ cash and$],[$issuing a series of ten $6\%$ notes for $$20,000$ each, coming due at $30-$day intervals.$]]],[22.,\backslash$table$[[$Settled a product liability lawsuit with a customer for $$50,000,$ payable in January.$],[$Accrued the loss in a litigation claims payable account.$]]],[31.,\backslash$table$[[$Paid the amount due to Greenwood Co$.$ on the first note in the series issued on$],[$December $1.]]]]$

Directions:

Journalize the transactions.

Journalize the adjusting entry for each of the following accrued expenses at the end of the current year:

a$.$ Product warranty cost, $$70,000.$

b$.$ Interest on the nine remaining notes owed to Greenwood Co$.$