Reference no: EM132463665

Problem a) Sarasota Corp. has the following account balances at December 31, 2017:

Notes payable ($62,000 due after 12/31/18)         $104,000

Unearned service revenue                                    73,000

Mortgage Payable ($94,000 due in 2018)                260,000

Salaries payable                                                   33,000

Accounts payable                                                 66,000

In addition, Sarasota is involved in a lawsuit. Legal counsel feels it is probable Sarasota will pay damages of $26,000 in 2018. Sarasota records contingent liabilities in the account Litigation Liability.

Question 1: Prepare the current liabilities section of Sarasota's December 31, 2017, balance sheet.

Problem b) Flounder Corp.'s gross payroll for April is $48,300. The company deducted $2,246 for CPP, $884 for EI, and $9,339 for income taxes from the employees' cheques. Employees are paid monthly at the end of each month.

Point (a) Make a journal entry for Flounder on April 30 to record the payment of the April payroll to employees. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Problem c) Crane Company began selling game consoles on November 1, 2017. The company offers a 75-day warranty for defective merchandise. Based on past experience with other similar products, Crane estimates that 2.50% of the units sold will become defective in the warranty period, and that the average cost of replacing or repairing a defective unit is $20. In November, Crane sold 30,000 units and 450 defective units were returned. In December, Crane sold 35,000 units and 640 defective units were returned. The actual cost of replacing the defective units was $21,800.

Point (a) Make a journal entry to accrue for the estimated warranty costs for the November and December sales at December 31, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Problem d) On March 1, 2017, Tundra Trees purchased equipment from Edworthy Equipment Dealership in exchange for a seven-month, 3%, $43,000 note payable. Interest is due at maturity. Tundra Trees has a July 31 fiscal year end. Edworthy has a May 31 fiscal year end. Both companies adjust their accounts annually. Tundra honours the note at maturity.

Point (a) For Tundra Trees, record all transactions related to the note. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 1,525. Record journal entries in the order presented in the problem.)

Problem e) In 2017, Sunland Company introduces a new product that includes a two-year warranty on parts. During 2017, 2,500 units are sold for $480 each. The cost of each unit was $170. The company estimates that 5% of the units will be defective and that the average warranty cost will be $90 per unit. The company has a December 31 fiscal year end and prepares adjusting entries on an annual basis.

Make an adjusting entry at December 31, 2017, to accrue the estimated warranty cost. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Problem f) Backyard Shed Solutions sells its largest shed for $1,700 plus HST of 13%. On May 10, 2017, it sold 20 of these sheds. On May 17, 2017, the company sold 90 of these sheds. All sales are cash sales.

Point (a) For each day's sales, calculate the HST. (Round answers to 0 decimal places, e.g. 5,275.)

HST payable

$

HST payable

$

Problem g) Marin Inc. borrows $66,000 from Cullumber Company on July 1, 2017 signing a 6%, one-year note payable. Interest is to be paid at maturity.

Question (a) Prepare journal entry for Marin Inc. to record the receipt of the proceeds of the note. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Problem h) The Brampton Bullet hockey team sold 2,120 tickets at $126 each for its 6-game home schedule.

Question (a) Prepare the entry to record the sale of the season's tickets. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)