The following items were selected from among the transactions completed by Pioneer Co. during the current year:
Mar. 1. Purchased merchandise on account from Galston Co., $360,000, terms n/30.
31. Issued a 30-day, 5% note for $360,000 to Galston Co., on account.
Apr. 30. Paid Galston Co. the amount owed on the note of March 31.
June 1. Borrowed $180,000 from Pilati Bank, issuing a 45-day, 4% note.
July 1. Purchased tools by issuing a $210,000, 60-day note to Zegna Co., which discounted the note at the rate of 7%.
16. Paid Pilati Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6.5% note for $180,000. (Journalize both the debit and credit to the notes payable account.)
Aug. 15. Paid Pilati Bank the amount due on the note of July 16.
30. Paid Zegna Co. the amount due on the note of July 1.
Dec. 1. Purchased office equipment from Taylor Co. for $500,000, paying $120,000 and issuing a series of ten 6% notes for $38,000 each, coming due at 30-day intervals.
22. Settled a product liability lawsuit with a customer for $310,000, payable in January.
Pioneer accrued the loss in a litigation claims payable account.
31. Paid the amount due Taylor Co. on the first note in the series issued on December 1.
Instructions
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, $27,500.
b. Interest on the nine remaining notes owed to Taylor Co.