he following selected transactions of Johnson Motors Company were completed during the current accounting year ended December $31.$

$1.$ March $1,$ borrowed $$55,000$ on a two$-$year, $12\%$ interest$-$bearing note. Interest is paid annually.

$2.$ April $1,$ borrowed cash and signed a $$44,000,$ two$-$year, noninterest$-$bearing note. The market rate for this level of risk was $12\%.$

$3.$ June $1,$ purchased a truck with a list price of $$72,600.$ Paid $$6,600$ cash and signed a $$66,000,$ one$-$year, noninterest$-$bearing note. The market rate for this level of risk was $12\%.$

$4.$ During the year, sold merchandise for $$66,000$ cash that carried a two$-$year warranty for parts and labor. A reasonable estimate of the cost of the warranty is $1\mathrm{.}5\%$ of sales revenue. By December $31,$ actual warranty costs amounted to $$550.$

$5.$ June $1,$ Johnson cosigned and guaranteed payment of a $$110,000,14\%,$ one$-$year note owed by a local supplier to City Bank. The bank required a cosignature; but Johnson believes that default by the debtor is only reasonably possible.

$6.$ Property taxes for the year are recorded monthly.

$$ Prior$-$year property taxes were $$4,591$ and were expected to increase by $15\%$ during the year.

$$ December $10$ final tax assessment received was $$5,500$ and was paid on February $1$ of the following year.

$7.$ In December a $$44,000$ cash dividends was declared $($not yet paid or issued$).$

$8.$ For the month of December, sales revenue $($excluding sales taxes collected$)$ was $$880,000.$ Sales tax is $5\%,$ applicable to $98\%$ of the sales. No unpaid sales tax

carried over from November.

$9.$ On December $31,$ interest has accrued on outstanding notes.