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Liability transactions The following items were selected from among the transactions completed by Sherwood Co. during the current year: Feb. 15. Purchased merchandise on account from Kirkwood Co., $144,000, terms n/30. Mar. 17. Issued a 60-day, 6% note for $144,000 to Kirkwood Co., on account. May 16. Paid Kirkwood Co. the amount owed on the note of March 17. June 15. Borrowed $138,000 from Triple Creek Bank, issuing a 60-day, 7% note. July 21. Purchased tools by issuing a $72,000, 90-day note to Poulin Co., which discounted the note at the rate of 9%. Aug. 14. Paid Triple Creek Bank the interest due on the note of June 15 and renewed the loan by issuing a new 60-day, 10% note for $138,000. (Journalize both the debit and credit to the notes payable account.) Oct. 13. Paid Triple Creek Bank the amount due on the note of August 14. Oct. 19. Paid Poulin Co. the amount due on the note of July 21. Dec. 1. Purchased equipment from Greenwood Co. for $132,000, paying $22,000 cash and issuing a series of ten 6% notes for $11,000 each, coming due at 30-day intervals. Dec. 12. Settled a product liability lawsuit with a customer for $73,000, payable in January. Accrued the loss in a litigation claims payable account. Dec. 31. Paid the amount due to Greenwood Co. on the first note in the series issued on December 1. Required: 1. Journalize the transactions. If an amount box does not require an entry, leave it blank. Assume a 360-day year. Do not round intermediate calculations. When required, round your final answers to one decimal places. Date Account Debit Credit Feb. 15 Inventory 144,000 0 Accounts Payable-Kirkwood Co. 0 144,000 Mar. 17 Accounts Payable-Kirkwood Co. 144,000 0 Notes Payable 0 144,000 May 16 Notes Payable 144,000 0 Interest Expense 0 x 0 Cash 0 14,568 X June 15 Cash 142,800 x 0 Notes Payable 0 142,800 X July 21 Tools 102,900 x 0 Interest Expense 2,100 x Notes Payable 0 105,000 X Aug. 14 Notes Payable 142,800 x 0 Interest Expense 2,380 x 0 Notes Payable 0 142,800 X Cash 0 2,380 X Oct. 13 Notes Payable 2,380 X 0 Interest Expense 0 2,380 X Cash 0 2,380 X Oct. 19 Notes Payable Cash Dec. 1 Office Equipment Cash Dec. 1 Office Equipment Notes Payable Cash Dec. 12 Litigation Loss Litigation Claims Payable Dec. 31 Notes Payable Interest Expense Cash 2. Journalize the adjusting entry for each of the following accrued expenses at the end of the current year: (a) product warranty cost, $15,700; (b) interest on the nine remaining notes owed to Greenwood Co. Item Account Debit Credit a. Product Warranty Expense Product Warranty Payable b. Interest Expense Interest Payable

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