On January 1, 2020, the ledger of ABC Company contains the following liability:

Accounts Payable $30,000

Sales Taxes Payable 5,000

Unearned Service Revenue 12,000

During January, the following selected transactions occurred.

Jan. 1 borrowed $20,000 in cash from Platteville Bank on a 4-month, 6%, $20,000 note.

5 Sold merchandise for cash totaling $9,752, which includes 6% sales taxes.

12 Provided services for customers who had made advance payments of $8,000. (Credit Service Revenue.)

14 Paid state treasurers department for sales taxes collected in December 2017, $5,000.

20 Sold 900 units of a new product on credit at $44 per unit, plus 6% sales tax.

This new product is subject to a 1-year warranty.

25 Sold merchandise for cash totaling $16,536, which excludes 6% sales taxes.

May-1 Payment of Notes payable taken on January 1, 2020.

Instructions:

(a) Journalize the above transactions.

(b) Journalize the adjusting entries on January 31 for:

(1) The outstanding notes payable, and

(2) Estimated warranty liability, assuming warranty costs are expected to equal 5% of sales of the new product.