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Problem $3$ Liability Transactions $$ Ch $10$

The following items were selected from among the transactions completed by Switch Co$.$ during the current year:

Jan $9$ Purchased merchandise on account from Beckham Co$,$ $$450,000,$ terms n$/30.$

Feb $8$ Issued a $60-$day, $5\%$ note for $$450,000$ to Beckham Co$.,$ on account.

Apr $9$ Paid Beckham Co$.$ the amount owed on the note of February $8.$

May $1$ Borrowed $$310,000$ from Verizon Bank, issuing a $90-$day, $7\%$ note.

Jun $2$ Purchased tools by issuing a $$243,000,60-$day note to Rapunzel Co$.,$ which discounted the note at a rate of $6\%.$

Jul $29$ Paid Verizon Bank the interest due on the note of May $1$ and renewed the note by issuing a new $90-$day, $7\%$ note for $$310,000$ note. $($Journalize both the debit and credit to the notes payable account$)$

Aug $1$ Paid Rapunzel Co$.$ the amount due on the note of June $2.$

Oct $27$ Paid Verizon Bank the amount due on the note of July $29.$

Dec $1$ Purchased office equipment from Lincoln Co$.$ for $$725,500$ paying $$125,500$ and issuing a series of ten $4\%$ notes for $$60,000$ each, coming due at $30-$day intervals.

$15$ Settled a product liability lawsuit with a customer for $$175,000$ payable in January. Switch accrued the loss in a litigation claims payable account.

$31$ Paid the amount due Lincoln 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, $21,200.$

b$.$ Interest on the nine remaining notes owed to Lincoln Co$.$

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