Question
Ariella Corp. had the following transactions during May 2020. All transactions are in Canadian dollars except where indicated. All sales include a 2 year warranty,
Ariella Corp. had the following transactions during May 2020. All transactions are in Canadian dollars except where indicated. All sales include a 2 year warranty, accruals for warranty are done on a monthly basis. Ariella uses a periodic inventory system.
May 2 Sales to Canadian customer on account $623,000 plus 5% GST.
May 6 Sales to US, customer on account US $540,000. There is no GST
on the sale. US dollar was worth Cdn $1.03 on this date
May 12 Inventory purchased on account, $360,000 plus 5% GST.
May 16 Collected in full from Canadian customer
May 24 Warranty work during the month totaled $7,530 for labour and $2,180 for
parts consumed from inventory.
May 31 At the end of the month, Ariella Corp has not yet received payment from
the US customer. The exchange rate is Cdn 1.05.
May 31 Warranty costs are expected to be 2% of CDN equivalent dollar sales in the month
May 31 Remitted net GST for the month
Required:
Prepare all the necessary journal entries for the above transactions. (13 marks)
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Principles of Financial Accounting
Authors: Belverd E. Needles, Marian Powers
12th edition
978-1133940562, 1133940560, 978-1285608464, 1285608461, 1133939287, 978-0357693605, 978-1285607047, 128560704X, 978-1133939283
