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., $366,000, terms n/30. 31 Issued a 30 -day, 6% note for $366,000 to Kirkwood Co., on account. Apr. 30 Paid Kirkwood Co. the amount owed on the note of March 31. Jun. 1 Borrowed $198,000 from Triple Creek Bank, issuing a 45-day, 8% note. Jul 1 Purchased toois by issuing a $270,000,60-day note to Poulin Co., which discounted the note at the rate of 6%. 16 Paid Triple Creek Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $198,000. (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 $400,000, paying $108,000 cash and issuing a series of ten 8% notes for $29,200 each, coming due at 30 -day intervals. 22 Settled a product liability lawsuit with a customer for $320,000, 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. Required: 1. Journalize the transactions. Assume a 360-dey year. 2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year: a. Product warranty cost, $29,000. b. Interest on the nine remaining notes owed to Greenwood Co. Assume a 360-day year. CHAT OF ACCOUMIS Shermood Co. Gerneral Ledger ASsiers REVEMUE 110 Cash 410 Sales 111 Acrounts Recrivable 610 Intresest Revenue. 112 Interest Recoivable 113. Notes Rreceivable EXPENSES 115 Invertory. 510 Cost of Goods Sold 116 Supplies 520 Salaries Expense. 118 Prepaid lnsurance 524 Depreciation Epense-Bulding 120 Land 525 Delivery Expense 123 fulding 620 Pepairs Expense 124 Accumutited Depreciation-Bulling 529 Seling Expenses 125 Ofice Equipment 531 Rent Expense 126 Accumulated Depreciation-Ctioe Equipment 532. Depreciason Expense-Office Equipment 127 Tools 533 Depreciation Expense-Tooks 128 Accumulated Depreciation-Tools 534 insurance Expense. 535 Supplies Expense LIABIUTIES 536 Payroll Tax Expense 210 Accounts Payable Kriboood Co. 537. Vacation Pay Expense: 211 Rocounts Parable-Grentrood Co. 533 Pension Expense 212 Acoounts Payable-Poulin Co. 539 Cash Short and Over. 213 interest Payable 640 Product Wamarty Expense 214 Notes Payable 541 Miscellanecus Expense 215. Salaries Payable 710 Interest Expense 216 Socias Securty Tax Payable 720 Loigation Loss 217 Medicare Tax Payable 218 Errployees Fedecal Income Tax Payable 219 Employees State income Trax Payable 220 Group insurance Payable 221 Bond Deductions Payable 224 Fidera: Unemployment Tax Payable: 225 State Unemploymeat Tax Payable 226 Vhcaton Pay Parable 227 Unhunded Pensioc Labily. EOUITY 310 Common Stock 311 Retained Eamings 312 Dividends 2. Joumalize the adiusting entry for each of the following accrued expenses at the end of the current year. a. Product warranty cost, 529,000 . b. Interest on the nine remaining notes owed to Greenwood Co. Assume a 360-day year
