Bramble Ltd. is a small wholesaler of restaurant supplies. The company's post-closing trial balance at December 31, 2020, the end of its fiscal year, is presented below: BRAMBLE LTD. Post-Closing Trial Balance December 31, 2020 Debit Credit Cash $60,000 Accounts receivable 465,000 Allowance for doubtful accounts 23,250 Inventory 357,000 Estimated inventory returns 10,000 Equipment 1,800,000 Accumulated depreciation-equipment 480,000 Accounts payable 288,000 Interest payable (pertains to bank loan payable) 3,000 Employee income tax payable 51,000 CPP payable 26.000 El payable 12,000 Provisions Refund liability Deferred revenue Bank loan payable Common shares Retained earnings $2,692,000 $2,692,000 32,000 40,000 10,000 900,000 60,000 766,750 The company had the following transactions during January 2021. When recording these transactions, use the item number listed instead of the date and also use that same item number if recording a subsequent adjustment pertaining to that item. 1. The bank loan bears interest at 4% and requires monthly fixed payments of $9,000 including interest on the first day of the month. The company properly accrued interest on the loan at the end of 2020. A loan payment was made on January 1, 2021, and the principal portion of that $9,000 payment was $6,000. Accrued interest on the bank loan for the month of January 2021. Early in January 2021, the company paid for a one-year insurance policy on equipment for $24,000. Equipment has a useful life of five years and is depreciated on a double-diminishing-balance basis. 2. 3. 4. 5. All of the payroll-related liabilities were paid off in early January 2021. 6a. 7. 8. 9. 6b. At the end of January, salaries for that month were paid out. Gross salaries were $290,000 and amounts withheld from the employees' paycheques included the related employee income tax of $51,000, CPP of $14,775, and El of $4,698. In addition to these amounts, the employer was required to contribute $14,775 to CPP and $6,577 to El. The salaries were paid but no amounts were remitted to the government regarding the salaries for January. Paid a $9,000 income tax instalment. Sales for the month of January were $800,000 and the cost of the inventory sold was $200,000. The company uses a perpetual inventory system. All sales were on credit. The company expects a 5% return rate. Accounts receivable collected during the month were $780,000. 10. A customer owing the company $16,000 went bankrupt during January. 11. Reviewed outstanding accounts receivable. Determined, through an aging of accounts, that doubtful accounts were $30,000 at month end. 12a. Inventory costing $220,000 was purchased in January on credit. 12b. Office expenses of $45,000 were incurred on credit. 13. During the month of January, accounts payable amounting to $313,000 were paid. 14. 15. 16. 17. The provisions at December 31, 2020, consisted of estimated damages from a lawsuit. In January, legal counsel felt that an additional $26,000 of damages had become probable that month. Any expenses relating to these damages are recorded in administrative expenses. Deferred revenue consists of deposits from customers received in advance. No new deposits were received in January, but by the end of the month, management has estimated that deferred revenue at that time should be $5,000. Products sold to these customers that paid deposits cost 25% of the price they were sold at. The company accepted product returns from credit customers in January. The sales value of these products was $36,000 and the company just reduced the receivable from the customer when the product was returned. The products returned were not damaged and cost 25% of the price they were sold at. The company declared and paid dividends amounting to $7,000 in January. Record the January transactions and adjustments. (Credit account titles are automatically indented when the amount January transactions: Item Account Titles and Explanation 1. Bank Loan Payable Interest Payable Debit Credit 9000 3000 Cash 3 Prepaid Insurance 24000 Cash 5. CPP Payable 26000 El Payable 12000 Employee Income Tax Payable 51000 Cash 6a. Salaries Expense 290000 CPP Payable El Payable Cash Employee Income Tax Payable 6b. Refund Liability CPP Payable El Payable 7. Refund Liability 8a. Cash Accounts Receivable Sales Refund Liability (To record sales) 12000 24000 89000 14775 4698 51000 14775 6577 8b. Cost of Goods Sold Refund Liability Accounts Payable (To record Cost of Goods Sold) 9. Cash 10 Accounts Receivable Accounts Receivable 11. Bad Debts Expense 12a. Inventory Accounts Payable 220000 12b. Administrative Expenses 45000 13 Accounts Payable 13. Accounts Payable 16. Cash 17. Dividends Declared Cash 313000 36000 220000 45000 313000 Adjustments: Item Account Titles and Explanation 2. Interest Expense Interest Payable 3. Insurance Expense Prepaid Insurance 4. Depreciation Expense 14. Accumulated Depreciation - Equipment Administrative Expenses Provisions 15a. Deferred Revenue 15b. Cost of Goods Sold Inventory Debit Credit