Part B Part A Ricecooker Ltd. offers a 12-month warranty to its customers with the rice cookers that it sells. Warranty liabilities are estimated at 10% of sales for the previous 12 months. The equity section of Leslie Ltd as at 1 July 2019 is as follows: On July 1, 2019, the balance of the Warranty Provision account was $48,000 (normal balance) $4,000,000 60,000 During the year ended June 30, 2020, warranty expense is $50,000. Share capital 2,000,000 ordinary shares, issued at $2 fully paid 8% 20,000 preference shares, issued at $3, fully paid General reserve Revaluation surplus Retained earnings 50,000 Revenue from the sale of rice cookers in the current financial year is $450,000. 8,000 There have been no changes in suppliers, product quality or prices. 590,000 During the year ending 30 June 2020, the following transactions occurred: Required: (1) Construct the "Warranty Provision' account. (i) Declared interim dividend of 6 cents per share to all ordinary shareholders on August 1, 2019. (6 marks) (ii) Issued 10,000 units of 8% preference shares at $3 to Anita Ltd on August 15, 2019. (ii) Below is the claim history of Ricecooker Ltd for the past two years: (iii) Payment of interim dividend to ordinary shareholders was made on February 28, 2020. Warranty Claims Financial Year 2018 48,000 Financial Year 2019 50,000 Revenue of previous 12 months 400,000 (iv) 420,000 Declared and paid dividend to preference shareholders, including the newly issued shares on May 31, 2020. (v) Declared dividend June 30, 2020. f2 cents per share to all ordinary shareholders on Do you think the warranty provisions made are adequate to cover warranty claims for years from 2018 to 2020? Give reason for your answer. Show your working. What is the recommendation you would suggest to the management of Ricecooker Ltd on their warranty policy? Required: Prepare journal entries for the above transactions. Include narrations and show all workings. (10 marks) (4 marks)