(Learning Objectives 1, 5: Reporting current and long-term liabilities) Assume that McKinley Electronics completed these selected transactions during June 20X0:

a. Sales of $2,200,000 are subject to estimated warranty cost of $154,000. The provision for warranty repairs at the beginning of the year was $34,000, and warranty payments for the year totaled $50,000.

b. On June 1, McKinley Electronics signed a $55,000 note payable that requires annual payments of $13,750 plus 6% interest on the unpaid balance each June 2.

c. Music For You, Inc., a chain of music stores, ordered $125,000 worth of CD players.

With its order, Music For You, Inc., sent a cheque for $125,000 in advance, and McKinley shipped $70,000 of the goods. McKinley will ship the remainder of the goods on July 3, 20X0.

d. The June payroll of $260,000 is subject to employee withheld income tax of $30,000 and payroll tax of 7.65%. On June 30, McKinley pays employees their take-home pay and accrues all tax amounts.

❙ Requirement 1. Report these items on McKinley Electronics’ balance sheet at June 30, 20X0.