Casey Company Purchases Inventory for $100,000, Paying $40,000 in Cash

Essay

Casey Company purchases inventory for $100,000, paying $40,000 in cash and signing a 3-year, 5% note payable for the remainder. The company has $90,000 sales in the month of March and estimates that 5% of product sales will require warranty repairs. Journalize the transactions below and identify which accounts are known liabilities and which are estimated liabilities.
Inventory purchase
Sales for March (25% on account, 75% in cash).
Estimated dollars for warranties.