The following items were selected from among the transactions completed by Warwick Co. during the current year:
Feb. 3. Purchased merchandise on account from Onifade Co., $410,000, terms n/30.
Mar. 3. Issued a 45-day, 6% note for $410,000 to Onifade Co., on account.
Apr. 17. Paid Onifade Co. the amount owed on the note of March 3.
June 1. Borrowed $250,000 from Aldhiezer Bank, issuing a 60-day, 7.5% note.
July 21. Purchased tools by issuing a $300,000, 60-day note to Nash Co., which discounted the note at the rate of 8%.
31. Paid Aldhiezer Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 9% note for $250,000. (Journalize both the debit and credit to the notes payable account.)
Aug. 30. Paid Aldhiezer Bank the amount due on the note of July 31.
Sept. 19. Paid Nash Co. the amount due on the note of July 21.
Dec. 1. Purchased office equipment from Oso Co. for $340,000, paying $40,000 and issuing a series of ten 8% notes for $30,000 each, coming due at 30-day intervals.
12. Settled a product liability lawsuit with a customer for $165,000, payable in January.
Warwick accrued the loss in a litigation claims payable account.
31. Paid the amount due Oso Co. on the first note in the series issued on December 1.
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, $32,500.
b. Interest on the nine remaining notes owed to Oso Co.