Reference no: EM13597796
The following items were selected from among the transactions completed by emerald bay stores co. during the current year:
-Jan 15. Purchased merchandise on account from hood Co., $220,000, terms n/30.
-Feb 14. Issued 60-day, %6 note for $220,000 to Hood Co on account.
-April 15. Paid Hood Co. the amount owed on the note of February 14.
-June2. Borrowed $187,500 from Acme Bank, issuing a 60-day, 8% note.
-July 10. Purchased tools by issuing a $190,000, 90-day note to Columbia supply Co., which discounted the note at the rate of 6%.
-Aug 1. Paid Acme Bank the interest rate due on the note of June 2 and renewed the loan by issuing a new 60-day, 10% note for $187,500
-Sept 30. Paid Acme Bank the amount due on the note of August 1.
-Oct 8. Paid Columbia Supply co. the amount due on the note of July 10.
-Dec 1. Purchased office equipment from Mountain Equipment co. for $120,000 paying $20,000 and issuing a series of ten 6% notes for $10,000 each coming due at 30-day intervals.
-Dec 5. Settled a product liability lawsuit with a customer for $76,000, payable in January. Emerald Bay accrued the loss in litigation claims payable account.
-Dec 31. Paid the amount due Mountain Equipment 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 $16,400;
(b) interest on the nine remaining notes owed to Mountain Equipment co.