fill in the bank.
Larkspur, 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 $37 and cost $27. All sales are on account, and the 13% HST is not included in the selling price. Also, in the last year, Larkspur began selling gift cards in denominations of $58 and $20. Cash and/or credit cards were accepted for payment. This practice was started when Larkspur's CFO learned that not all of the gift cards are actually redeemed. HST is recorded at the time of redemption. Larkspur has a calendar year end and uses a perpetual inventory system. Transactions for the current scal year include the following: Sales of 3,890 units. Return of 260 units not defective, returned to inventory. Replaced 41 units under warranty. Sold $50,390 of gift cards. Redeemed $14,960 of gift cards; COGS was $9,050. (Hint: The redeemed gift cards were used to pay for merchandise as well as the HST.) P'PPP!' Date Account Titles and Explanation Debit Credit Summary (To record sales and sales tax payable) (To record cost of goods sold) (To record sales returns and sales taxes) (To record cost of goods sold) (To record honouring of actual warranty cost)(To record sale of gift cards) (To record redemption of gift cards) (To record cost of goods sold)Prepare any adjusting journal entries required on December 31, the end of the fiscal year. (Hint: Assume 11% 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 i H H i i H H i (To accrue warranty costs) i H H i i H H i i H H i (To record redemption) Prepare 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 enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) Account tles and Explanation Debit Credit What 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 of $S
