Novak Corp. has manufactured a broad range of quality products since 1991. The operating cycle of the business is less than one year. The following information is available for the company's fiscal year ended February 28, 2020. Novak follows ASPE. 1. Novak has $4 million of bonds payable outstanding at February 28, 2020, which were issued at par in 2009 and are due in 2029. The bonds carry an interest rate of 7%, payable semi-annually each June 1 and December 1. 2. Novak has several notes payable outstanding with its primary banking institution at February 29, 2020. In each case, the annual interest is due on the anniversary date of the note each year (same as the due dates listed). The notes are as follows: Due Date Apr. 1, 2020 Jan. 31, 2021 Mar. 15, 2021 Oct. 30, 2022 Amount Due $168,000 210,000 504,000 240,000 Interest Rate 8% 9% 7% 8% 3. Novak uses the expense approach to account for assurance-type warranties. The company has a two-year warranty on selected products, with an estimated cost of 1% of sales being returned in the 12 months following the sale, and a cost of 1.5% of sales being returned in months 13 to 24 following the sale. The warranty liability outstanding at February 29, 2019, was $6,000. Sales of warrantied products in the year ended February 29, 2020, were $157,000. Actual warranty costs incurred during the current fiscal year are as follows: Warranty claims honoured on 2018-2019 sales Warranty claims honoured on 2019-2020 sales $ 4,700 1,400 $ 6,100 4. The accounts payable subsidiary ledger shows balances of regular trade payables for supplies and purchases of goods and services on open account. Included in the net balance of $401,000 are accounts with credit balances totalling $417,000 and accounts with debit balances totalling $16,000 at February 29, 2020. Included in trade payables is a loan of $26,000 owing to an affiliated company. 5. The following information relates to Novak's payroll for the month of February 2020. Novak's required contribution for El is 1.4 times that of the employee contribution; for CPP, it is 1.0 times that of the employee contribution. $210,000 Salaries and wages outstanding at February 29, 2020 For the last payroll of the year, the following unpaid balances apply: EI withheld from employees CPP withheld from employees Income taxes withheld from employees Union dues withheld from employees 9,400 17,400 48,700 21,700 6. Novak regularly pays GST owing to the Receiver General for Canada on the 15th of the month. Novak's GST transactions include the GST that it charges to customers and the GST that it is charged by suppliers of goods and services. During February 2020, purchases attracted $28,000 of GST, while the GST charged on invoices to customers totalled $39,000. At January 31, 2020, the balances in the GST Receivable and GST Payable accounts were $33,900 and $59,100, respectively. 7. Other miscellaneous liabilities included $50,000 of dividends payable on March 15, 2020; $25,000 of bonuses payable to company executives (75% payable in September 2020, and 25% payable in March 2021); and $75,000 in accrued audit fees covering the year ended February 29, 2020. 8. Novak sells gift cards to its customers. The company does not set a redemption date and customers can use their cards at any time. At March 1, 2019, Novak had a balance outstanding of $95,000 in its Unearned Revenue account. Novak received $22,500 in cash for gift cards purchased during the current year, and $37,500 in redemptions took place during the year. Based on past experience, 15% of customer gift card balances never get redeemed. At the end of each year, Novak recognizes 15% of the opening balance of Unearned Revenue as earned during the year. (a) Prepare the current liability section of the February 29, 2020 balance sheet of Novak Corp. (Round answers to 0 decimal places, e.g. 5,275.) Novak Corp. Statement of Financial Position (Partial) V Novak Corp. has manufactured a broad range of quality products since 1991. The operating cycle of the business is less than one year. The following information is available for the company's fiscal year ended February 28, 2020. Novak follows ASPE. 1. Novak has $4 million of bonds payable outstanding at February 28, 2020, which were issued at par in 2009 and are due in 2029. The bonds carry an interest rate of 7%, payable semi-annually each June 1 and December 1. 2. Novak has several notes payable outstanding with its primary banking institution at February 29, 2020. In each case, the annual interest is due on the anniversary date of the note each year (same as the due dates listed). The notes are as follows: Due Date Apr. 1, 2020 Jan. 31, 2021 Mar. 15, 2021 Oct. 30, 2022 Amount Due $168,000 210,000 504,000 240,000 Interest Rate 8% 9% 7% 8% 3. Novak uses the expense approach to account for assurance-type warranties. The company has a two-year warranty on selected products, with an estimated cost of 1% of sales being returned in the 12 months following the sale, and a cost of 1.5% of sales being returned in months 13 to 24 following the sale. The warranty liability outstanding at February 29, 2019, was $6,000. Sales of warrantied products in the year ended February 29, 2020, were $157,000. Actual warranty costs incurred during the current fiscal year are as follows: Warranty claims honoured on 2018-2019 sales Warranty claims honoured on 2019-2020 sales $ 4,700 1,400 $ 6,100 4. The accounts payable subsidiary ledger shows balances of regular trade payables for supplies and purchases of goods and services on open account. Included in the net balance of $401,000 are accounts with credit balances totalling $417,000 and accounts with debit balances totalling $16,000 at February 29, 2020. Included in trade payables is a loan of $26,000 owing to an affiliated company. 5. The following information relates to Novak's payroll for the month of February 2020. Novak's required contribution for El is 1.4 times that of the employee contribution; for CPP, it is 1.0 times that of the employee contribution. $210,000 Salaries and wages outstanding at February 29, 2020 For the last payroll of the year, the following unpaid balances apply: EI withheld from employees CPP withheld from employees Income taxes withheld from employees Union dues withheld from employees 9,400 17,400 48,700 21,700 6. Novak regularly pays GST owing to the Receiver General for Canada on the 15th of the month. Novak's GST transactions include the GST that it charges to customers and the GST that it is charged by suppliers of goods and services. During February 2020, purchases attracted $28,000 of GST, while the GST charged on invoices to customers totalled $39,000. At January 31, 2020, the balances in the GST Receivable and GST Payable accounts were $33,900 and $59,100, respectively. 7. Other miscellaneous liabilities included $50,000 of dividends payable on March 15, 2020; $25,000 of bonuses payable to company executives (75% payable in September 2020, and 25% payable in March 2021); and $75,000 in accrued audit fees covering the year ended February 29, 2020. 8. Novak sells gift cards to its customers. The company does not set a redemption date and customers can use their cards at any time. At March 1, 2019, Novak had a balance outstanding of $95,000 in its Unearned Revenue account. Novak received $22,500 in cash for gift cards purchased during the current year, and $37,500 in redemptions took place during the year. Based on past experience, 15% of customer gift card balances never get redeemed. At the end of each year, Novak recognizes 15% of the opening balance of Unearned Revenue as earned during the year. (a) Prepare the current liability section of the February 29, 2020 balance sheet of Novak Corp. (Round answers to 0 decimal places, e.g. 5,275.) Novak Corp. Statement of Financial Position (Partial) V