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%.

May 15 - 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.

August 16 - Purchased merchandise on account from Exige Co., $90,000, terms, n/30

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

October 28 - Paid Spyder Manufacturing Co. the amount due on the note of May 1

October 30 - Paid Exige Co. the amount owed on the note of September 15.

November 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.

December 16 - Paid the amount due Gallardo Co. on the first note in the series issued on November 16.

December 28 - 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

1. Journalize the transactions.

2. 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.