The following information is obtained from the 2014 records of Chef’s Spoon Incorporated, a company that produces high-quality kitchenware. The company has a June 30 year end and follows ASPE.

1. The total payroll of Chef’s Spoon was $460,000 for the month of June 2014. Income taxes withheld were $110,000. The employment insurance is 1.98% for the employee and 1.4 times the employee premium for the employer. The CPP/QPP contributions are 4.95% for each. No employee earned more than the maximum insurable or pensionable earnings. Payroll is entered at the end of the month, and paid at the first of the next month. The remittance of taxes, CPP, and EI takes place the following month.
2. At the end of May, the vacation pay accrual account had a balance of $50,000. No vacations were taken in June and 70 employees who earned an average salary of $40,000 per year earned 4% vacation pay, and another 20 employees, who earned an average salary of $125,000, earned 8% vacation pay.
3. In January 2014, a worker was injured in the factory in an accident partially the result of his own negligence. The worker has sued Chef’s Spoon for $800,000. Legal counsel believes it is somewhat possible that the outcome of the suit will be unfavourable and that the settlement would cost the company from $250,000 to $500,000.
4. The company sued one of its suppliers for providing raw materials used in Chef’s Spoon products that contained a highly toxic plastic, and it is involved in a pending court case. Chef’s Spoon’s lawyers believe it is likely that the company will be awarded damages of $1.5 million.
5. On February 1, the company purchased equipment for $90,000 from Culinary Universe Company, paying $30,000 in cash and giving a one-year, 8% note for the balance. This transaction has not been recorded by Chef’s Spoon yet because the $30,000 cash payment was made by a personal cheque from a key shareholder. The shareholder is asking to be repaid for this amount by July 15.
6. In order to keep up with the competition, the company needed to modernize its operations by building a new warehouse and production facility. The company had been able to save $1 million in cash but would need to come up with $4.2 million to finance the balance of the construction costs. After much analysis, the CEO made the decision to issue $4.2-million, five-year, 6% bonds since it would be cheaper than getting a loan from the bank. The bonds were finally issued February 1, 2014, and would pay interest on February 1 and August 1. The bonds yield 5% and are callable at 103. The company uses the effective interest method to amortize bond discount and premium amounts.
7. During the 2014 fiscal year, the company opened its first retail store. This store sold products manufactured by Chef’s Spoon, but also purchased from other suppliers of kitchen products. The retail store is located in a high-traffic shopping mall, and the company took control of the space on July 1, 2013. After two months of renovation work, the store opened and has been very successful. Sales in the first 10 months of operations totalled $1,523,000. The lease agreement required monthly rental payments of $15,000 due at the beginning of each month, and, if the total store sales exceeded $1,250,000 during the lease year, the company was required to pay additional rent of 1% of sales over $1,250,000.
8. The retail store sells several premium kitchenware items and gives its customers a coupon with each premium kitchenware item sold. In return for three coupons, customers receive a complimentary spice container that the company purchases for $1.20 each. Chef’s Spoon’s experience indicates that 60% of the coupons will be redeemed. During the 10 months ended June 30, 2014, 100,000 premium kitchenware items were sold, and 45,000 coupons were redeemed. As of June 30, no entries have been recorded with respect to the coupons.

Instructions
(a) For each transaction above, prepare the necessary journal entries to record the liability at year end, and any transactions that have not been properly recorded for the June 30, 2014 year end. If any transaction does not require an entry, explain in detail why no entry is needed, and what disclosure is required, if any.
(b) On August 31, 2015, Chef’s Spoon Inc. called 40% of the bonds payable. Prepare the required journal entry for the retirement on this date.