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%.
	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.)
Jul.	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, n/30.
Sep.	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.
	30	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.
	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.

Required:

1.

Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.

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, $26,800.
B.	Interest on the 19 remaining notes owed to Gallardo Co. Assume a 360-day year.

Chart of Accounts

CHART OF ACCOUNTS

Aston Martin Inc.

General Ledger

	ASSETS
110	Cash
111	Accounts Receivable
112	Interest Receivable
113	Notes Receivable
115	Merchandise Inventory
116	Supplies
118	Prepaid Insurance
120	Land
123	Building
124	Accumulated Depreciation-Building
125	Store Equipment
126	Accumulated Depreciation-Store Equipment
127	Equipment
128	Accumulated Depreciation-Equipment

	LIABILITIES
210	Accounts Payable-Exige Co.
211	Accounts Payable-Gallardo Co.
212	Accounts Payable-Spyder Manufacturing 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
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	Owner, Capital
311	Owner, Drawing
312	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Merchandise Sold
520	Salaries Expense
524	Depreciation Expense-Building
525	Delivery Expense
526	Repairs Expense
529	Selling Expenses
531	Rent Expense
532	Depreciation Expense-Store Equipment
533	Depreciation Expense-Equipment
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

Journal

1. Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access page 12 of the journal for the adjusting entries.

PAGE 11

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
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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, $26,800.
B.	Interest on the 19 remaining notes owed to Gallardo Co. Assume a 360-day year.

PAGE 12

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1		Adjusting Entries
2
3
4
5