Current liabilities-entries and disclosure

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Reference no: EM13952946

Current liabilities: entries and disclosure

A review of selected financial activities of Visconti's during 20XX disclosed the following:

12/1	Borrowed $20,000 from the First City Bank by signing a 3- month, 15% note payable. Interest and principal are due at maturity.
12/10	Established a warranty liability for the XY-80, a new product. Sales are expected to total 1,000 units during the month. Past experience with similar products indicates that 2% of the units will require repair, with warranty costs averaging $27 per unit (parts only).
12/22	Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30.
12/26	Borrowed $5,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 days for daily interest calculation)
12/31	Repaired six XY-80s during the month at a total cost of $162.
12/31	Accrued 3 days of salaries at a total cost of $1,400.

Instructions

a. Prepare journal entries to record the transactions.

b. Prepare adjusting entries on December 31 to record accrued interest for each of the notes payable.

Reference no: EM13952946

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