The following items were selected from among the transactions completed by Sherwood Co. during the current year: Mar. 1 31 30 Purchased merchandise on account from Kirkwood Co., $225,000, terms n/30. issued a 30-day, 8% note for $225,000 to Kirkwood Co., on account. Paid Kirkwood Co the amount owed on the note of March 31. 1 1 16 Borrowed $600,000 from Triple Creek Bank, issuing a 45-day, 6% note. Purchased tools by issuing a $50,000, 60-day note to Poulin Co., which discounted the note at the rate of 6%. Paid Triple Creek Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 7% note for $600,000. (Journalize both the debit and credit to the notes payable account.) Paid Triple Creek Bank the amount due on the note of July 16. Paid Poulin Co. the amount due on the note of July 1. Purchased equipment from Greenwood Co. for $280,000, paying $80,000 cash and issuing a series of ten 9% notes for $20,000 each, coming due at 30-day intervals. Aug. 15 30 1 Dec. Settled a product liability lawsuit with a customer for $40,000, payable in January. Accrued the loss in a litigation claims payable account. 31 Paid the amount due to Greenwood Co. on the first note in the series issued on December 1 Required: 1. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year 2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year (refer to the Chart of Accounts for exact wording of account titles): a. Product warranty cost, $65,000. b. Interest on the nine remaining notes owed to Greenwood Co. Assume a 360-day year. REVENUE ASSETS 110 Cash 410 Sales 610 Interest Revenue 111 Accounts Receivable 112 Interest Receivable 113 Notes Receivable 115 Inventory 116 Supplies 118 Prepaid Insurance 120 Land 123 Building 124 Accumulated Depreciation-Building 125 Office Equipment 126 Accumulated Depreciation Office Equipment 127 Tools EXPENSES 510 Cost of Goods Sold 520 Salaries Expense 524 Depreciation Expense-Building 525 Delivery Expense 526 Repairs Expense 529 Selling Expenses 531 Rent Expense 532 Depreciation Expense-Office Equipment 533 Depreciation Expense-Tools 534 Insurance Expense 535 Supplies Expense 536 Payroll Tax Expense 537 Vacation Pay Expense 538 Pension Expense 539 Cash Short and Over 540 Product Warranty Expense 541 Miscellaneous Expense 710 Interest Expense 720 Litigation Loss 128 Accumulated Depreciation-Tools LIABILITIES 210 Accounts Payable-Kirkwood Co. 211 Accounts Payable-Greenwood Co. 212 Accounts Payable-Poulin Co. 213 Interest Payable 214 Notes Payable 215 Salaries Payable 216 Social Security Tax Payable 217 Medicare Tax Payable 218 Employees Federal Income Tax Payable 219 Employees State Income Tax Payable 217 Medicare Tax Payable 218 Employees Federal Income Tax Payable 219 Employees State Income Tax Payable 220 Group Insurance Payable 221 Bond Deductions Payable 224 Federal Unemployment Tax Payable 225 State Unemployment Tax Payable 226 Vacation Pay Payable 227 Unfunded Pension Liability 228 Product Warranty Payable 229 Litigation Claims Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends Mar.1 Inventory 225,000.00 Accounts Payable-Kirkwood Co. 225.000.00 Cash 49,500.00 500.00 Interest Expense Notes Payable 50,000.00 Notes Payable 600,000.00 4,500.00 Interest Expense Cash 4,500.00 Notes Payable 600,000.00 Notes Payable 600,000.00 3,500.00 Interest Expense Cash 603,500.00 Notes Payable 50,000.00 Cash 50,000.00 Office Equipment 280,000.00 Notes Payable 200.000.00 Cash 80.000.00 Litigation Loss 40,000.00 Litigation Claims Payable 40,000.00 20,150.00 Cash Notes Payable 20.000.00 Interest Expense 150.00 Cash Notes Payable Litigation Claims Payable Notes Payable 40,000.00 Litigation Loss Litigation Claims Payable 40,000.00 20.150.00 Cash Notes Payable 20,000.00 Interest Expense 150.00 Cash Notes Payable Litigation Claims Payable Notes Payable Notes Payable 20,000.00 150.00 Interest Expense Cash 22,150.00 Points: 57.88 / 69 JOURNAL Score: 43/51 ACCOUNTING EQUATION DATE POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY DESCRIPTION Adjusting Entries Dec. 31 Product Warranty Expense Product Warranty Payable Interest Expense Interest Payable Dec. 31 Points: 8.43 / 10 Feedback