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

Mar.
1 Purchased merchandise on account from Kirkwood Co., $175,000, terms n/30.
31 Issued a 30-day, 6% note for $175,000 to Kirkwood Co., on account.
Apr.
30 Paid Kirkwood Co. the amount owed on the note of March 31.
Jun.
1 Borrowed $400,000 from Triple Creek Bank, issuing a 45-day, 5% note.
Jul.
1 Purchased tools by issuing a $45,000, 60-day note to Poulin Co., which discounted the note at the rate of 7%.
16 Paid Triple Creek Bank the interest due on the note of June 1 and renewed the loan by issuing a new 30-day, 6% note for $400,000. (Journalize both the debit and credit to the notes payable account.)
Aug.
15 Paid Triple Creek Bank the amount due on the note of July 16.
30 Paid Poulin Co. the amount due on the note of July 1.
Dec.
1 Purchased equipment from Greenwood Co. for $260,000, paying $40,000 cash and issuing a series of ten 9% notes for $22,000 each, coming due at 30-day intervals.
22 Settled a product liability lawsuit with a customer for $50,000, payable in January. Accrued the loss in a litigation claims payable account.
31 Paid the amount due to Greenwood 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.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, $80,000.b. Interest on the nine remaining notes owed to Greenwood Co. Assume a 360-day year. help needed please

The journal entries are referred to as the entries that help the firm to record the various economic transactions of it whether it is in cash or out cash. The transactions are recorded and then evaluated as per the book of entries. Those transactions are called entries because they are entered at a  particular date and event.

The journal entries have been attached below.

To know more about the journal entries, refer to the link below:

link

Sherwood Co.

1. Journal Entries:

March 1:

Debit Purchases $175,000

Credit Accounts Payable (Kirkwood Co.) $175,000

To record purchase of merchandise on account, terms, n/30.

March 31:

Debit Accounts Payable (Kirkwood Co.) $175,000

Credit Notes Payable (Kirkwood Co.) $175,000

To record issue of a 30-day, 6% note.

April 30:

Debit Notes Payable (Kirkwood Co.) $175,000

Debit Interest on Notes $875

Credit Cash Account $175,875

To record settlement of note and interest.

June 1:

Debit Cash Account $400,000

Credit Bank Note Payable (Triple Creek Bank) $400,000

To record 45-day, 5% bank note.

July 1:

Debit Equipment (Tools) $45,000

Credit Notes Payable (Poulin Co.) $45,000

To record purchase of tools and issue of 60-day note.

July 16:

Debit Interest on Bank Notes $2,500

Credit Cash Account $2,500

To record payment of interest due.

July 16:

Debit Bank Note Payable (Triple Creek Bank) $400,000

Credit Bank Note Payable (Triple Creek Bank) $400,000

To record loan renewal with issue of a new 30-day, 6% note.

August 15:

Debit Bank Note Payable (Triple Creek Bank) $400,000

Debit Interest on Notes $2,000

Credit Cash Account $402,000

To record payment on amount due.

Dec. 1:

Debit Equipment $260,000

Credit Cash Account $40,000

Credit Notes Payable (Greenwood Co.) $220,000

To record purchase of equipment and issue of a series of ten 9% notes for $22,000 each, due at 30-day intervals.

Dec. 22:

Debit Litigation Loss $50,000

Credit Litigation Claims Payable $50,000

To record a product liability lawsuit settled.

Dec. 31:

Debit Notes Payable $22,000

Debit Interest on Notes $165

Credit Cash Account $22,165

To settle note issued.

2) Adjusting Entries:

a) Product Warranty Cost

Debit Product Warranty $80,000

Credit Product Warranty Payable $80,000

To record accrued product warranty cost.

b) Interest on remaining notes to Greenwood Co.

No journal entries required.

Explanation:

a) The interests on remaining notes to Greenwood Co. are not yet due for payment as at December 31, and so do not require to be accrued.

b) Journal entries are used to record business transactions as they occur daily and individually.  They show which accounts are to be debited and which are to be credited in the General Ledger.  Journals are books of original entry.  This means that they first capture each transaction in the books of accounts.

c) Adjusting entries are entries made to accrue revenue and expenses in order to comply with the accrual concept and matching principle of US GAAP.

d) Product warranty cost is the amount charged to expense only when warranty costs are incurred under a warranty program, or it may be set up as an allowance, where a standard amount is charged to expense each month.

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