Below are selected transactions of Blackbird Ltd, a public company, for Year 4:

1. On January 1, Year 4, the company sold $500,000 of products, all of which carried a two-year warranty (included in the price). If the two-year warranty was sold separately, it was estimated that 4% of the selling price represented the warranty portion. Actual warranty costs were $4,200 in Year 4. 35% of the revenue would be earned in the first year and the balance being recognized in the second year. The company uses service-type warranty (revenue-based). The company charges 5% GST on 100% of the full price at the date of the transaction.

2. On May 10, the company purchased goods from Jay Corp. for $50,000, terms 2/15, net 30. Blackbird uses the periodic inventory system. The invoice was paid on May 21.

3. On August 1, the company purchased equipment for $180,000 from Seagull Ltd., paying $60,000 in cash and issuing a one-year, 7% note for the balance.

4. On September 1, the company borrowed money from the Second National Bank by signing a one year, zero-interest-bearing note for $160,000. The market rate for a similar note is 8%.

5. On October 1, Blackbird purchased new furniture for $12,000 on account. Provincial sales tax of 7% and GST of 5% were charged by the supplier on the purchase price. The furniture has a useful life of 10 years and the company uses straight-line depreciation.

Instructions: a. Prepare the journal entries necessary to record the transactions above using appropriate dates. (10 marks) b. Prepare the adjusting entries necessary at year end, December 31, Year 4 related to the above transactions. Round to the nearest dollar.