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QUESTION 1

CP Water Proofing Ltd. has a December 31 year-end. During the 2020 fiscal year, the Company had the following transactions involving current and non-current liabilities:

1. On December 1, 2020, the Company entered into an agreement to lease manufacturing equipment. The lease is for 5 years, with payments required monthly on the last day of the month of $2,376. The leasing interest rate is 7%/annum, the present value of minimum lease payments is $120,000 and the estimated useful life of the equipment is 5 years. What is the value of the outstanding lease liability on December 31, 2020? Show all your work.

2. The Company collects non-refundable deposits before starting any work. During the year, the Company collected $125,000 of non-refundable deposits for jobs that are expected to be completed during 2021. What amount of the liability (if any) related to the non-refundable deposits should be reported on the year-end statement of financial position? Explain why.

3. During the last week of December, wages earned by employees amounted to $7,500 and the company withheld CPP of $476, EI of $378 and income taxes of $1,750. Employer contributions were $476 for CPP and $425 for EI. Wages are to be paid during January 2021. Record the journal entry.

Required:

Answer each of the following questions mentioned above related to the various current and non-current liabilities. Be specific and show all your work.