The January 1, Year 1 trial balance for the Wilson Company is found on the trial balance tab. The beginning balances are assumed. Smith Co. entered into the following transactions involving short-term liabilities. (Use 360 days a year.) Year 1 Apr. 20 Purchased $43,750 of merchandise on credit from Sanchez, terms n/30. May 19 Replaced the April 20 account payable to Sanchez with a 90-day, 8%, $38,000 note payable along with paying $5,750 in cash. July 8 Borrowed $102,000 cash from NBR Bank by signing a 120-day, 12%, $102,000 note payable. Aug. 17 Paid the amount due on the note to Sanchez at the maturity date. Nov. 5 Paid the amount due on the note to NBR Bank at the maturity date. Nov. 28 Borrowed $63,000 cash from Chicago Bank by signing a 60-day, 12%, $63,000 note payable. Dec. 31 Recorded an adjusting entry for accrued interest on the note to Chicago Bank. Year 2 Jan. 27 Paid the amount due on the note to Chicago Bank at the maturity date.

General Journal tab - Prepare the Year 1 journal entries related to the notes and accounts payable of Smith Co. Calculation of interest tab - Use the interest formula (P x R x T) to verify the amount of interest recorded in your entries. Verify that total interest expense agrees with the trial balance. Year 2 payment tab - Prepare the January 27, Year 2 entry to record the repayment of the note at maturity.