Daniels Company engaged in the following transactions during 2010:

a. Purchased $48,000 of merchandise on January 26. The seller offered terms of 1/10, n/15.

b. Paid for the purchased merchandise (transaction a) on February 6.

c. Borrowed $420,000 on an eight-month, 7 percent interest-bearing note on May 31.

d. Purchased $84,000 of merchandise on June 2. The seller offered terms of 2/15, n/20.

e. Paid for the purchased merchandise (transaction d) on June 28.

f. Received from Haywood, Inc., on September 4 a $36,000 deposit against a total selling price of $360,000 for merchandise to be manufactured for Haywood.

g. Paid quarterly installments of Social Security and individual federal income tax withholdings, as shown below, on October 10. The Social Security was recorded as an expense during the quarter, and the amount paid represents both the employee and employer share (50% each).

Social Security tax ..........$ 348,000

Federal income tax withheld ......1,257,000

Assume that Daniels records inventory using the gross method.

Required:

1. Prepare journal entries for these transactions.

2. Prepare any adjusting entries necessary at December 31, 2010.