AA Inc estimates that warranty costs will be 2.5% of sales. During the year 2021, sales totaled $4,500,000. AA Incs Estimated Warranty Payable balance on January 1, 2021 was $55,000 and on December 31, 2021s year-end balance sheet the account balance was $48,000.

1. What amount was paid in warranties during 2021?
2. Do you recommend that AA Inc retain the 2.5% estimate? Why or why not. Answer in one brief bullet point or sentence.
3. AA Inc signed a 3-month 4% $35,000 Note Payable on December 1, 2021. Write the journal entry for the N/P on December 1, the adjusting entry on December 31 relating to the note, and the payment of the note and interest owing on the maturity date (February 29, 2022).

QUESTION 2

BB Corp is a concert management company. On March 1, 2022 the company collected $4,000,000 cash for eight concerts to be held in Atlantic Canada. The concerts are scheduled for May 12, 13, 19, 20, 26 and 28.

1. Prepare the journal entries (do not write explanations below each journal entry) to record concert revenues and cash received for March 1, May 12, 13, 19 and 20.
2. What is the balance in the current liability account, as of May 21? Prepare the brief balance sheet representation (two or three lines only) to show the liability classification name, the current liability account name and the balance amount on May 21.