ACCOUNTING- Current liabilities: entries and disclosure.

2. Current liabilities: entries and disclosure. A review of selected financial activities of Visconti’s during 20XX disclosed the following:1-Dec: Borrowed $10,000 from the First City Bank by signing a 3-month, 15% note payable.Interest and principal are due at maturity.10-Dec: Established a warranty liability for the XY-80, a new product. Sales are expected tototal 1,000 units during the month. Past experience with similar products indicatesthat 3% of the units will require repair, with warranty costs averaging $27 per unit (parts only).22-Dec: Purchased $16,000 of merchandise on account from Oregon Company, terms 2/10, n/30.26-Dec: Borrowed $5,000 from First City Bank; signed a 15% note payable due in 60 days. (Assume 360 day year for interest)31-Dec: Repaired six XY-80s during the month at a total cost of $16231-Dec: Accrued three days of salaries at a total cost of $1,400.Instructionsa. Prepare journal entries to record the transactions.b. Prepare adjusting entries on December 31 to record accrued interest for each of the notes payable.

 

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