Question

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., $414,000, terms n/30.
	31	Issued a 30-day, 4% note for $414,000 to Galston Co., on account.
Apr.	30	Paid Galston Co. the amount owed on the note of March 31.
Jun.	1	Borrowed $180,000 from Pilati Bank, issuing a 45-day, 4% note.
Jul.	1	Purchased tools by issuing a $228,000, 60-day note to Zegna Co., which discounted the note at the rate of 6%.
	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 $520,000, paying $90,000 and issuing a series of ten 4% notes for $43,000 each, coming due at 30-day intervals.
	22	Settled a product liability lawsuit with a customer for $315,000, 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 Required:1.Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. Assume a 360-day year. Round your answers to the nearest dollar.2.Journalize the adjusting entry for each of the following accrued expenses at the end of the current year (refer to the Chart of Accounts for exact wording of account titles): A. Product warranty cost, $26,500. B. Interest on the nine remaining notes owed to Taylor Co. Assume a 360-day year.

Answer 1

Date	Account titles & Description					Debit	Credit
1-Mar	merchandise inventory					414,000
	Accounts payable-Galston						414,000
31-Mar	Accounts payable-Galston					414,000
	Notes payable						414,000
30-Apr	Notes payable					414,000
	interest expense		(414,000*4%*30/360)			1380
	cash						415,380
1-Jun	Cash					180,000
	notes payable						180,000
1-Jul	Tools					225,720
	interest expense		(228000*6%*60/360)			2280
	notes payable						228,000
16-Jul	4% notes payable					180,000
	interest expense		(180,000*4%*45/360)			900
	6.5% notes payable						180,000
	cash						900
15-Aug	notes payable					180,000
	interest expense					975
	Cash						180,975
30-Aug	Notes payable					228,000
	cash						228,000
1-Dec	office Equipment					520,000
	cash						90,000
	notes payable						430,000
22-Dec	litigation loss					315,000
	litigation Claims payable						315,000
31-Dec	notes payable					43,000
	interest expense					143
	cash						43,143
2)	product warranty expense					26,500
	product warranty payable						26,500
	interest expense					1290
	interest payable		(43000*9*4%*30/360				1,290