Question :
A review of selected financial activities of Visconti's throughout 20XX disclosed the subsequent:
12/1 Borrowed $20,000 from the First City Bank by signing a 3- month, 15 percent note payable. Interest and principal are due at maturity.
12/10 Established a warranty liability for the XY-80, a new product. Sales are expected to net 1,000 units during the month. Past experience with similar products shows that 2% of the units will need repair, with warranty costs averaging $27 per unit (parts only).
12/22 Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30.
12/26 Borrowed $5,000 from First City Bank; signed a 15 percent note payable due in 60 days. (Consider 360 days for daily interest calculation)
12/31 Repaired six XY-80s through the month at a total cost of $162.
12/31 Accrued 3 days of salaries at a total cost of $1,400.
Instructions
a. Purpose journal entries to record the transactions.
b. Purpose adjusting entries on 31st December to record accrued interest for each of the notes payable.