Current liabilities: entries and disclosure. A review of selected financial activities or Visconti's during 20XX disclosed the following:

Dec 1: Borrowed $10,000 from the First City Bank by signing a 3-month, 15% note payable. Interest and principal are due at maturity.

Dec 10: Established a warranty liability for the XY-80, a new product. Sales are expected to total 1,000 units during the month. Past experience with similar products indicates that 3% of the units will require repair, with warranty costs averaging $27 per unit (parts only).

Dec 22: Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30.

Dec 26: Borrowed $5,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 day year for interest)

Dec 31: Repaired six XY-80's during the month at a total cost of $162

Dec 31: Accrued three days of salaries at a total cost of $1,4000

Instructions:

a) Prepare journal entries to record the transactions

b) Prepare adjusting entries on December 31 to record accrued interest for each of the notes payable.