1. Kingbird Corp. offers its customers a 5-piece knife set in exchange for $11 and the purchase of its CC Cookware set. The company purchased 2,930 units of the 5-piece knife sets at $15 each. It estimates that 70% of customers will participate in the promotion and that 5% of the amount received from customers relates to the awarded premiums. In 2021, the company sold 3,680 cookware sets at a sales price of $113 resulting in sales revenue of $415,840. By the end of the year, 2,460 customers took advantage of the promotion. Prepare the appropriate journal entries assuming Kingbird follows ASPE and uses the expense approach. Ignore any cost of goods sold entry. (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.)

Account Titles and Explanation	Debit	Credit
(To record purchase of premiums)
(To record cash sales)
(To record redemption for premiums)
(To record premium expense)

List of Accounts

Assistance Used

• Accounts Payable
• Accounts Receivable
• Accretion Expense
• Accumulated Depletion - Mineral Resources
• Accumulated Depreciation - Drilling Platform
• Accumulated Depreciation - Oil Tanker Depot
• Accumulated Depreciation - Buildings
• Accumulated Depreciation - Equipment
• Asset Retirement Obligation
• Bonus Expense
• Bonus Payable
• Buildings
• Cash
• Container Sales Revenue
• Cost of Goods Sold
• CPP Contributions Payable
• Current Tax Expense
• Depreciation Expense
• Dividends Payable
• Drilling Platform
• EI Premiums Payable
• Employee Benefit Expense
• Employee Income Tax Deductions Payable
• Estimated Inventory Returns
• Estimated Inventory Returns
• Estimated Liability for Premiums
• Equipment
• Freight-in
• Furniture and Fixtures
• Gain on Settlement of ARO
• GST Payable
• GST Receivable
• HST Payable
• HST Receivable
• Income Tax Expense
• Income Tax Payable
• Income Tax Receivable
• Interest Expense
• Interest Payable
• Inventory
• Inventory of Premiums
• Land Improvements
• Liability for Guarantee
• Litigation Expense
• Litigation Liability
• Loss Due to Environmental Clean-up
• Loss on Expropriation
• Loss on Guarantee
• Loss on Settlement of ARO
• Materials, Cash, Payables
• Mineral Resources
• No Entry
• Notes Payable
• Notes Receivable
• Oil Tanker Depot
• Parental Leave Benefits Payable
• Payroll Tax Expense
• Premium Expense
• Premium Liability
• Property Tax Expense
• Property Tax Payable
• Prepaid Expenses
• Property Tax Expense
• Property Tax Payable
• PST Payable
• Purchase Discounts
• Purchase Discounts Lost
• Purchase Returns and Allowances
• Purchases
• Refund Liability
• Rent Expense
• Rent Payable
• Rent Revenue
• Retained Earnings
• Salaries and Wages Expense
• Salaries and Wages Payable
• Sales Returns and Allowances
• Sales Revenue
• Sales Tax Payable
• Service Revenue
• Sick Pay Wages Payable
• Subscriptions Revenue
• Trucks
• Unearned Revenue
• Union Dues Payable
• Vacation Wages Payable
• Warranty Expense
• Warranty Liability
• Warranty Revenue

2. Whispering Corp. manufactures a wide range of equipment. The companys biggest seller is the Whatchamacallit, which sells for $4,530 each. Starting in 2020 Whatchamacallit now carries with it a 2-year warranty against manufacturing defects. In addition to this warranty, customers can purchase an optional extended warranty for $1,630 extra that extends the Whatchamacallits warranty an additional 2 years. From experience with similar products, Whispering Corp. has determined that each Whatchamacallit sold will average $1,010 in replacement parts (ignore labour costs for repairs). In 2020, the company sells 640 Whatchamacallits; 240 of these customers decide to purchase the optional extended warranty. Assuming the revenue is earned evenly over the two-year contract. Also in 2020, the company incurred $165,000 in total repair costs (replacement parts out of inventory).

Prepare the journal entry to record the sale of the Whatchamacallits and the extended warranties (sales would take place throughout the year; prepare only one entry at December 31, 2020 for the total sales). Ignore any cost of goods sold entry. (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.)

Account Titles and Explanation	Debit	Credit

Prepare the 2020 journal entries related to the product warranties using the expense approach. (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.)

Account Titles and Explanation	Debit	Credit
(To record warranty expense)
(To accrue warranty expense)

Assuming that the extended warranty period begins January 1, 2022 for all customers who purchased the extended warranty, prepare the journal entries at December 31, 2022 for the extended warranty. Assume that $281,200 in warranty costs were incurred in 2022. (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.)

Account Titles and Explanation	Debit	Credit
(To record warranty revenue)
(To record warranty expense)

List of Accounts

• Accounts Payable
• Accounts Receivable
• Accretion Expense
• Accumulated Depletion - Mineral Resources
• Accumulated Depreciation - Drilling Platform
• Accumulated Depreciation - Oil Tanker Depot
• Accumulated Depreciation - Buildings
• Accumulated Depreciation - Equipment
• Asset Retirement Obligation
• Bonus Expense
• Bonus Payable
• Buildings
• Cash
• Container Sales Revenue
• Cost of Goods Sold
• CPP Contributions Payable
• Current Tax Expense
• Depreciation Expense
• Dividends Payable
• Drilling Platform
• EI Premiums Payable
• Employee Benefit Expense
• Employee Income Tax Deductions Payable
• Estimated Inventory Returns
• Estimated Inventory Returns
• Estimated Liability for Premiums
• Equipment
• Freight-in
• Furniture and Fixtures
• Gain on Settlement of ARO
• GST Payable
• GST Receivable
• HST Payable
• HST Receivable
• Income Tax Expense
• Income Tax Payable
• Income Tax Receivable
• Interest Expense
• Interest Payable
• Inventory
• Inventory of Premiums
• Land Improvements
• Liability for Guarantee
• Litigation Expense
• Litigation Liability
• Loss Due to Environmental Clean-up
• Loss on Expropriation
• Loss on Guarantee
• Loss on Settlement of ARO
• Materials, Cash, Payables
• Mineral Resources
• No Entry
• Notes Payable
• Notes Receivable
• Oil Tanker Depot
• Parental Leave Benefits Payable
• Payroll Tax Expense
• Premium Expense
• Premium Liability
• Property Tax Expense
• Property Tax Payable
• Prepaid Expenses
• Property Tax Expense
• Property Tax Payable
• PST Payable
• Purchase Discounts
• Purchase Discounts Lost
• Purchase Returns and Allowances
• Purchases
• Refund Liability
• Rent Expense
• Rent Payable
• Rent Revenue
• Retained Earnings
• Salaries and Wages Expense
• Salaries and Wages Payable
• Sales Returns and Allowances
• Sales Revenue
• Sales Tax Payable
• Service Revenue
• Sick Pay Wages Payable
• Subscriptions Revenue
• Trucks
• Unearned Revenue
• Union Dues Payable
• Vacation Wages Payable
• Warranty Expense
• Warranty Liability
• Warranty Revenue