Question
In 2021, Dwayne left his current job and opened his own store called Dwayne's Dishwashers. In the first year they had sales of dishwashers totaling
In 2021, Dwayne left his current job and opened his own store called Dwayne's Dishwashers. In the first year they had sales of dishwashers totaling $350,000. These dishwashers come with a one-year warranty. For minor customer claims on the warranty, Dwayne will hire a repair company to fix the dishwashers. If the defect is substantial, Dwayne will replace the customer's dishwasher with a new one.
Based on his many years as a dishwasher repairman, Dwayne believes that 3% of the dishwasher sales is an appropriate estimate of the cost of the warranty claims. During 2021, Dwayne ended up replacing 14 dishwashers, each costing $500. In addition, Dwayne had his repairment fix a number of minor issues which cost him another $2,000.
REQUIRED:
1) Assume Dwayne records all entries relating to warranties at December 31 each year. Record all these entries for 2021. 2) What is the warranty liability at December 31, 2021?
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Rachel works at Central Perk as a server serving coffee and pastries. There are two other servers that work there as well. The caf opened up when Covid-19 restrictions lifted and Central Perk was very busy so the three servers each worked 50 hours/wk for the last two weeks of the January. The servers each make $18/hour for straight-time (40 hours per week) and time and a half for any hours above that.
Gunther is a very caring boss at Central Perk and pays the following benefits for each staff member: $5 weekly into an RRSP, $10 weekly for healthcare benefits. The servers want to help out during this pandemic where possible so each of them has $10 withheld off each pay cheque that is donated to a local charity dedicating efforts to help with Covid-19 support. All servers are subject to income tax at 20%, CPP at 5.45% and EI at 1.58%.
REQUIRED: Record Central Perk's accruals for all employees' payroll at January 31, and record the payment to employees and remittances to CRA on Feb 2. (Hint: how many employees are there??)
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