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Notes Payable; Contingent LiabilityThe following items were selected from among the transactions completed by Sherwood Co$.$ during the current year:Mar. $31.$Issued a $30-$day, $8\%$ note for $$225,000$ to Kirkwood Co$.,$ on account.Apr. $30.$Paid Kirkwood Co$.$ the amount owed on the note of March $31.$June $1.$Borrowed $$600,000$ from Triple Creek Bank, issuing a $45-$day, $6\%$ note.July $16.$Paid Triple Creek Bank the amount owed on the note of June $1.$Dec. $22.$Settled a product liability lawsuit with a customer for $$40,000,$ payable in January. Record the litigation settlement as a loss with a related litigation claims payable account.If no account or activity is affected, select $"$No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases, cash outflows, and the income statement effects that decrease net income as negative amounts. Assume $360$ days in a year$\mathrm{.}1.$ Illustrate the effects on the accounts and financial statements of recording each of the preceding transactions.Financial Statement EffectsBalance SheetAssets$=$Liabilities$+$Stockholders' Equity$=+$Mar. $31.$fill in the blank $5$fill in the blank $6$fill in the blank $7$fill in the blank $8$Statement of Cash FlowsIncome Statementfill in the blank $10$fill in the blank $12$Financial Statement EffectsBalance SheetAssets$=$Liabilities$+$Stockholders' Equity$=+$Apr. $30.$fill in the blank $16$fill in the blank $17$fill in the blank $18$Statement of Cash FlowsIncome Statementfill in the blank $20$fill in the blank $22$Financial Statement EffectsBalance SheetAssets$=$Liabilities$+$Stockholders' Equity$=+$June $1.$fill in the blank $26$fill in the blank $27$fill in the blank $28$Statement of Cash FlowsIncome Statementfill in the blank $30$fill in the blank $32$Financial Statement EffectsBalance SheetAssets$=$Liabilities$+$Stockholders' Equity$=+$July $16.$fill in the blank $36$fill in the blank $37$fill in the blank $38$Statement of Cash FlowsIncome Statementfill in the blank $40$fill in the blank $42$Financial Statement EffectsBalance SheetAssets$=$Liabilities$+$Stockholders' Equity$=+$Dec. $22.$fill in the blank $46$fill in the blank $47$fill in the blank $48$Statement of Cash FlowsIncome Statementfill in the blank $50$fill in the blank $522.$ Illustrate the effects on the accounts and financial statements of an end$-$of$-$year adjustment for accrued warranty costs of $$65,000.$Financial Statement EffectsBalance SheetAssets$=$Liabilities$+$Stockholders' Equity$=+$Dec. $31.$fill in the blank $56$fill in the blank $57$fill in the blank $58$Statement of Cash FlowsIncome Statementfill in the blank $60$fill in the blank $62$

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