can someone explain how to get 1133 for warranty expense and warranty liability? Also, 585 on HST payable?
WileyPLUS Problem 10-3 Shamrock, Inc. sells products that carry a two year warranty. Any defective product is replaced with a new item taken from inventory. Management believes that this is the most cost effective way to deal with any defects or customer complaints. Estimates of claims are expected to be 2 out of every 100 units sold. The units sell for $25 and cost $15. All sales are on account, and the 13% HST is not included in the selling price. Also, in the last year, Shamrock began selling gift cards in denominations of $47 and $21. Cash and/or credit cards were accepted for payment. This practice was started when Shamrock's CFO learned that not all of the gift cards are actually redeemed. HST is recorded at the time of redemption. Shamrock has a calendar year end and uses a perpetual inventory system. Transactions for the current fiscal year include the following: 1. Sales of 4,020 units. 2. Return of 245 units not defective, returned to inventory. 3. Replaced 42 units under warranty. Sold $50,870 of gift cards. 5. Redeemed $15,190 of gift cards; COGS was $9,490. (Hint: The redeemed gift cards were used to pay for merchandise as well as the HST.) Prepare journal entries for the above transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Summary Accounts Receivable 113,565 HST Payable 13,065 Sales 100,500 (To record sales and sales tax payable) Cost of Goods Sold 60,300 Merchandise Inventory 60,300 (To record cost of goods sold) Sales Returns and Allowances 6,125 HST Payable 796 Accounts Receivable 6,921 (To record sales returns and sales taxes)Merchandise Inventory 3,675 Cost of Goods Sold 3,675 (To record cost of goods sold) Warranty Liability 630 Merchandise Inventory 630 (To record honouring of actual warranty cost) Cash 50,870 Unearned Revenue 50,870 (To record sale of gift cards) Unearned Revenue 15,190 HST Payable 1,747 Sales 13,442 (To record redemption of gift cards) Cost of Goods Sold 9,490 Merchandise Inventory 9,490 (To record cost of goods sold)Prepare any adjusting journal entries required on December 31, the end of the fiscal year. (Hint: Assume 10% of the gift cards will never be redeemed.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit Warranty Expense 1,133 Warranty Liability 1,133 To accrue warranty costs)\fPrepare the journal entry to record payment of the HST. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and ent 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Account Titles and Explanation Debit Credit HST Payable 14,601 Cash 14,601What is the ending balance in the Warranty Liability account on December 31 (after adjustments)? (Round answer to 0 decimal places, e.g. 5,275.) Ending balance in the Warranty Liability Credit balance of $ 503
