PR $10-1$B Liability transactions

Obj. $1,5$

The following items were selected from among the transactions completed by Aston Martin Inc.

during the current year:

Apr. $15.$ Borrowed $$225,000$ from Audi Company, issuing a $30-$day, $6\%$ note for that amount.

May $1.$ Purchased equipment by issuing a $$320,000,180-$day note to Spyder Manufacturing Co$.,$ which discounted

the note at the rate of $6\%.$

Paid Audi Company the interest due on the note of April $15$ and renewed the loan by issuing a new

$60-$day, $8\%$ note for $$225,000.($Record both the debit and credit to the notes payable account.$)$

July $14.$ Paid Audi Company the amount due on the note of May $15.$

Aug. $16.$ Purchased merchandise on account from Exige Co$.,$ $$90,000,$ terms, $\frac{n}{30}.$

Sept. $15.$ Issued a $45-$day, $6\%$ note for $$90,000$ to Exige Co$.,$ on account.

Oct. $28.$ Paid Spyder Manufacturing Co$.$ the amount due on the note of May $1.$

Paid Exige Co$.$ the amount owed on the note of September $15.$

Nov. $16.$ Purchased store equipment from Gallardo Co$.$ for $$450,000,$ paying $$50,000$ and issuing a series of twenty

$9\%$ notes for $$20,000$ each, coming due at $30-$day intervals.

Dec. $16.$ Paid the amount due Gallardo Co$.$ on the first note in the series issued on November $16.$

Settled a personal injury lawsuit with a customer for $$87,500,$ to be paid in January. Aston Martin Inc. accrued

the loss in a litigation claims payable account.

Instructions

Journalize the transactions.

Journalize the adjusting entry for each of the following accrued expenses at the end of the

current year:

a$.$ Product warranty cost, $$26,800.$

b$.$ Interest on the $19$ remaining notes owed to Gallardo Co$.$