Crane's Cycle Booth Ltd. had the following transactions involving current liabilities in its first year of operations: 1 The company ordered bicycles from suppliers for $475,000, on credit. It paid $210,000 to suppliers during the year. 2 The shop has five employees, who earn gross wages of $351,000 for the year. From this, the company deducted 24% for income taxes, $19,130 in CPP premiums, and $5,546 in El premiums before distributing the cheques to the staff. As an employer, Crane was also required to match the employees' CPP premiums and pay $7.764 in El premiums. Eleven-twelfths of the amounts due to the government (all except the last month) were paid before the end of the year. 3. The company gives customers a one-year warranty against defects on bicycles. Management estimated that warranty costs would total 1.5% of sales. Sales of bicycles for the year were $2,340,000. During the year, the company spent $24,420 on refunds under the warranty. Some customers order expensive, custom-fitted bicycles. In these cases, the company requires them to pay a deposit of 25% of the selling price when the order is placed. During the year, deposits totalling $45,800 were received for custom orders. None of these orders have been delivered yet. No. Account and explanation 1. (To record purchase of inventory on account.) 2. (To record payment to supplier.) (To record payment to the staff.) (To record employer's liabilities.) 3. (To record payment to the government.) (To record warranty expense.) 4. (To record warranty payments.) Debit Credit