Liability Transactions

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

Feb. 15. Purchased merchandise on account from Kirkwood Co., $144,000, terms n/30. Mar. 17. Issued a 60-day, 8% note for $144,000 to Kirkwood Co., on account. May 16. Paid Kirkwood Co. the amount owed on the note of March 17. June 15. Borrowed $135,600 from Triple Creek Bank, issuing a 60-day, 9% note. July 21. Purchased tools by issuing a $81,000, 90-day note to Poulin Co., which discounted the note at the rate of 7%. Aug. 14. Paid Triple Creek Bank the interest due on the note of June 15 and renewed the loan by issuing a new 60-day, 10% note for $135,600. (Journalize both the debit and credit to the notes payable account.) Oct. 13. Paid Triple Creek Bank the amount due on the note of August 14. Oct. 19. Paid Poulin Co. the amount due on the note of July 21. Dec. 1. Purchased office equipment from Greenwood Co. for $108,000, paying $18,000 cash and issuing a series of ten 6% notes for $9,000 each, coming due at 30-day intervals. Dec. 12. Settled a product liability lawsuit with a customer for $83,000, payable in January. Accrued the loss in a litigation claims payable account. Dec. 31. Paid the amount due to Greenwood Co. on the first note in the series issued on December 1. Required:

1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. If required, round to one decimal place. Don't round the intermediate calculations.

For a compound transaction, accounts should be listed largest to smallest.

2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year: (a) product warranty cost, $14,700; (b) interest on the nine remaining notes owed to Greenwood Co.

Feb. 15 Mar. 17 May 16 June 15 July 21 Aug. 14 Oct. 13 Oct. 19 Dec. 1 Dec. 12 Dec. 31 Accounts Payable-Kirkwood Co. Cash Inventory Litigation Claims Payable Notes Payable Accounts Payable-Kirkwood Co. Cash Inventory Notes Payable Office Equipment Accounts Payable-Kirkwood Co. Cash Interest Expense Inventory Notes Payable Accounts Payable-Kirkwood Co. Cash Inventory Notes Payable Office Equipment Accounts Payable-Kirkwood Co. Accounts Receivable-Kirkwood Co. Cash Inventory Notes Payable Accounts Payable-Kirkwood Co. Accounts Receivable-Kirkwood Co. Cash Interest Expense Inventory Accounts Payable-Kirkwood Co. Cash Interest Expense Inventory Notes Payable Accounts Payable Cash Interest Expense Inventory Notes Payable Accounts Payable Cash Inventory Litigation Claims Payable Notes Payable Accounts Payable Cash Inventory Notes Payable Tools Accounts Payable Accounts Receivable Cash Interest Expense Office Equipment Accounts Payable Cash Interest Expense Notes Payable hetools Accounts Payable Cash Litigation Claims Payable Notes Payable Tools Accounts Payable Cash Interest Expense Litigation Claims Payable Tools Accounts Receivable Inventory Litigation Loss Notes Payable Office Equipment Accounts Payable Cash Inventory Office Equipment Tools Accounts Payable-Triple Creek Bank Accounts Receivable-Kirkwood Co. Cash Inventory Notes Payable Accounts Payable-Triple Creek Bank Accounts Receivable-Kirkwood Co. Cash Interest Expense Inventory Accounts Payable-Triple Creek Bank Cash Interest Expense Inventory Notes Payable Accounts Payable Cash Inventory Litigation Claims Payable Notes Payable Interest Expense Inventory Notes Payable Office Equipment Interest Expense Litigation Claims Payable Notes Payable Office Equipment Accounts Payable Interest Expense Inventory Notes Payable Office Equipment Cash Interest Expense Inventory Office Equipment Tools Interest Expense Litigation Claims Payable Litigation Loss Notes Payable Interest Expense Litigation Claims Payable Litigation Loss Notes Payable Accounts Payable-Greenwood Co. Accounts Receivable-Greenwood Co. Cash Inventory Notes Payable Accounts Payable-Greenwood Co. Accounts Receivable-Greenwood Co. Cash Interest Expense it Inventory Accounts Payable-Greenwood Co. Cash Interest Expense Inventory Notes Payable 2. Journalize the adjusting entry for each of the following accrued expenses Cash Litigation Claims Payable Litigation Loss Product Warranty Expense Product Warranty Payable Cash Litigation Claims Payable Litigation Loss Product Warranty Expense Product Warranty Payable Cash Interest Expense Interest Payable Notes Payable Product Warranty Payable Cash Interest Expense Interest Payable M) Product Warranty Expense Product Warranty Payable