Question 3 Monty 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. Monty follows ASPE. 1. 2. Monty 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. Monty 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 Interest Rate $144,000 9% 198,000 10% 504,000 264,000 8% 9% 3. 4. 5. Monty 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 $153,000. 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 $ 5,200 1,300 $ 6,500 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 $396,000 are accounts with credit balances totalling $411,000 and accounts with debit balances totalling $15,000 at February 29, 2020. Included in trade payables is a loan of $21,000 owing to an affiliated company. The following information relates to Monty's payroll for the month of February 2020. Monty's required contribution for EI is 1.4 times that of the employee contribution; for CPP, it is 1.0 times that of the employee contribution. 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 $200,000 9,000 17,300 49,100 21,400