4. Smart Buy Inc. a publicly-traded company, is an electronic retailer of products such as computers, laptops, and tablets. Smart Buy provides a three-year expense type warranty to repair any manufacturers defects. Smart Buy estimates that the cost of warranty claims will be 5% of all sales in the year. Total sales for 20X5 were $1.2 million, and the claims for warranty repairs in the year totalled $18,900. What is the amount of the provision for warranty payable that should be reported on Smart Buys December 31, 20X5, statement of financial position? The opening balance in the provision for warranty payable account is nil.

a) $18,900

b) $41,100

c) $60,000

d) $78,900

5. On October 1, 20X4, Austin Refining Corp. (ARC) entered into a non-cancellable contract to purchase 100,000 barrels of WTI crude oil at $50.00 per barrel. ARC took delivery of 40,000 barrels on November 15 when the price for immediate delivery (spot price) of WTI crude oil was $48.00. ARC had not yet taken delivery of the remaining barrels by its December 31, 20X4, year end. The spot price on December 31, 20X4, was $44.00 per barrel. Refining costs are $25.00 per barrel and the refined product can be sold under contract for $72.00 per barrel. ARC uses IFRS for reporting its financial results. If the time value of money element is immaterial, what amount should ARC recognize as a provision for this contract?

a) $180,000

b) $260,000

c) $300,000

d) $360,000