Exercise 1 1. The Creative Electronics Company shows the following selected adjusted account balances as at December 31, 2020: Accounts Payable $ 112,000 Salaries Payable 153,000 Accumulated Depreciation, Equipment 40,000 Estimated Warranty Liability 35,000 Mortgage Payable 292,000 Notes Payable, 6 months 38,000

Required: Prepare the current liability section of Creatives balance sheet. $52,000 in principal is due during 2021 regarding the mortgage payable. 2. On January 2, 2020, the Casual Elite Co. acquired land to build a distribution centre by issuing a 6%, three-year note for $200,000. The note will be paid in three annual payments of $74,822 each December 31. The payment schedule follows: Year Annual Payment Principal Portion of Payment Interest Portion of Payment Principal Balance at Year-End 2020 $ 74,822 $ 62,822 $ 12,000 $ 137,178 2021 74,822 66,591 8,231 70,587 2022 74,822 70,587 4,235 0

Required: 1. Prepare the entry to:

Issue the note on January 2, 2020.

Record the annual payment on December 31, 2020.

3. The following alphabetized list of selected adjusted account balances is from the records of Jasper Company on December 31, 2020: Accounts Payable $ 71,000 Accumulated DepreciationEquipment 46,000 Estimated Warranty Liability 16,500 GST Payable 9,800 Mortgage Payable, $35,000 due Dec. 31, 2021 370,000 Notes Payable, due April 1, 2021 15,800 Notes Payable, due April 1, 2024 114,000 PST Payable 7,600 Warranty Expense 11,200

Required: Prepare the current liability section of Jasper Company's 2020 balance sheet. 4. Stone Works is a paving stone installation business that operates from about April to October each year. The company has an outstanding reputation for the quality of its work and as a result pre-books customers a full year in advance. Customers must pay 40% at the time of booking and the balance on the completion date of the job. Stone Works records the 40% cash advance received from customers in the Unearned Revenues account. The December 31, 2020, balance sheet shows Unearned Revenues totalling $129,000. During 2021, $284,000 of cash was collected in total from customers: $205,000 regarding work completed during the year for customers who paid 40% down in 2020, and the balance representing the 40% prepayments for work to be done in 2022. Required: 1. Prepare the entry to record the collection of cash in 2021. 5. Zing Cell Phone Company entered into the following transactions involving current liabilities during 2020 and 2021. 2020 Mar. 14 Purchased merchandise on credit from Ferris Inc. for $138,000. The terms were 1/10, n/30 (assume a perpetual inventory system). Apr. 14 Zing paid $24,000 cash and replaced the $114,000 remaining balance of the account payable to Ferris Inc. with a 5%, 60-day note payable. May 21 Borrowed $124,000 from Scotiabank by signing a 4.5%, 90-day note. ? Paid the note to Ferris Inc. at maturity. ? Paid the note to Scotiabank at maturity. Dec. 15 Borrowed $99,000 and signed a 5.25%, 120-day note with National Bank. Dec. 31 Recorded an adjusting entry for the accrual of interest on the note to National Bank. 2021 ? Paid the note to National Bank at maturity.

Required: 1. Determine the maturity dates of the three notes just described. 6. Okanagan Refrigeration manufactures and markets commercial refrigeration systems for food trucks and specialized transport trucks. It was disclosed in notes to the companys financial statements that estimated warranty costs are accrued at the time products are sold. Assume that in 2020 warranty costs are estimated at $334,000 and that the related warranty work was actually paid for during 2021.

Required: Prepare journal entry to show the effect on financial statements due to warranties in 2020 and 2021.