The following items were selected from among the transactions completed by Wiggins Manufacturing during the current year:
Apr. 7 Borrowed $30,000 from First Financial Corporation, issuing a 60-day, 12% note for that amount.
May 10 Purchased equipment by issuing a $90,000, 120-day note to Brown Equipment Co., which discounted the note at the rate of 10%.
June 6 Paid First Financial Corporation the interest due on the note of April 7 and renewed the loan by issuing a new 30-day, 16% note for $30,000. (Record both the debit and credit to the notes payable account.)
July 6 Paid First Financial Corporation the amount due on the note of June 6.
Aug. 3 Purchased merchandise on account from Webb Co., $48,000, terms, n/30.
Sept. 2 Issued a 60-day, 15% note for $48,000 to Webb Co., on account.
7 Paid Brown Equipment Co. the amount due on the note of May 10.
Nov. 1 Paid Webb Co. the amount owed on the note of September 2.
15 Purchased store equipment from Shingo Equipment Co. for $150,000, paying $62,000 and issuing a series of eight 12% notes for $11,000 each, coming due at 30-day intervals.
Dec. 15 Paid the amount due Shingo Equipment Co. on the first note in the series issued on November 15.
21 Settled a product liability lawsuit with a customer for $83,000, to be paid in January. Wiggins Manufacturing accrued the loss in a litigation claims payable account.
1. Record the transactions.
2. Record the adjusting entry for each of the following accrued expenses at the end of the current year:
a. Product warranty cost, $16,800.
b. Interest on the seven remaining notes owed to Shingo Equipment Co.