Chen Ltd requires help with a few journal entries relating to liabilities. The business has monthly accounting periods, and the adjusting entries are for the month ending 31 March 2020.

1. On 1 February 2020, Chen Ltd borrowed $10,000, agreeing to repay that amount, with interest, over a 12- month period. The terms of the loan required $900 monthly payments due on the first of each month, consisting of part interest, part principal repayment. The bank calculates interest at 1% per month on the outstanding principal. Chen Ltd correctly journalised the 1 March payment.

Required:

1. Prepare the required adjusting journal entry on 31 March 2020.

2. Prepare the journal entry for the $900 payment on 1 April 2020.

2. On Friday, 27 March 2020, Chen Ltd correctly journalised the wage payments to its employees of $9,800 and to the IRD for the associated PAYE of $2,940. These amounts represented 10 working days. The next payroll and IRD pay date will be in April; however, even though the business is closed on weekends, all employees worked 30 and 31 March.

Required:

1. Prepare the required adjusting journal entry on 31 March 2020.

2. Prepare the journal entry for the next payroll and IRD payments in April, again assuming payment for 10 working days.

3. Chen Ltd offers a one-year repair warranty on its products. At the end of each month, the business updates its Warranty Provision account with an adjusting journal entry. On 31 March 2020, the Warranty Provision account had a $5,800 credit balance. The total number of units sold during the past 12 months were 4,000, and Chen Ltd expects 3% of those units to require repairs from 1 April going forward. Chen Ltd also estimates April sales at 350 units and expects 2% of those units to require repairs. On average, the repairs, outsourced to Lew Ltd, cost $50.

Required:

1. Prepare the required adjusting journal entry on 31 March 2020. Ignore GST.

2. Prepare the April journal entry for a $300 payment to Lew Ltd for repairs completed.