Andrew Peller Ltd. is a leading producer and marketer of quality wines in Canada. Selected information from the company's financial statements for the year ended March 31, 2010, are provided below (in thousands of dollars).

Required:
1. Compute the amount of cash collected from customers during the year. Assume that all sales for fiscal year 2010 were on credit.
2. Prepayments represent the net amount of a number of accounts, including prepaid insurance. The company had \(\$ 935\) in prepaid insurance at March 31, 2009, and \$1,180 at March 31, 2010 It also paid \$2,345 in June 2009 to renew its insurance policies. Prepare the adjusting journal entry on March 31, 2010, to record the amount of insurance expense for fiscal year 2010. The payment of \(\$ 2,345\) was debited to the insurance expense account.
3. Explain the nature of the account accrued liabilities. What would have caused the account balance to increase during the year?
4. The company's board of directors declared dividends of \(\$ 4,787\) during the year. Prepare a summary journal entry to record the amount of dividends paid during the year.
5. The company is required to pay income taxes in advance on a quarterly basis even though the exact amount of income taxes expense is not calculated until the end of the fiscal year. For this reason, the company may overpay the amount of taxes due to taxation authorities. Compute the amount of income taxes expense for 2010 and prepare the related adjusting journal entry at March 31, 2010.
6. The company's long-term debt includes a long-term bank loan for \(\$ 6,000\). The company signed for this loan on October 31, 2009, to be repaid on October 31, 2013. Interest on the loan, at an annual rate 8 percent, is payable each year on October 31. Prepare the adjusting journal entry that should be made on March 31, 2010 to recognize interest expense for fiscal year 2010.
7. Assume that the company's accountant did not record the journal entry you prepared for (6) above, what would be the effect of this error (overstatement, understatement, no effect) on the following:

a. total assets at March 31,2010 ,

b. profit for the year 2010, assuming that the company is subject to an income tax rate of \(40 \%\),

c. current liabilities at March 31,2010 .

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March 31, 2010 March 31, 2009 Statement of Financial Position Trade receivables 22,902 21,044 Prepayments 2,429 2,309 Income taxes recoverable (receivable) 1,327 6,318 Accrued liabilities 8,229 10,563 Dividends payable 1,197 1,088 Income taxes payable Long-term debt 47,633 71,549 Other information Sales for fiscal year 2010 263,151 income taxes paid during the year 640