Question 6 (10 marks) (Record your answers directly below the question.

Pandorra Products Inc. generated sales for the current month of 200 units at $180 each, subject to GST/HST sales tax of 10%. All sales are on account. The product sold is not GST/HST tax exempt, therefore the customer must bear the cost. Each unit carries a 6-month warranty. Pandorra Products Inc. promises to repair the unit should it become defective. The estimated cost per unit to the company to honour the warranty is $30 and experience has shown that approximately 8% of all units will have to be repaired during the warranty period. The manufacturing cost per unit is $80 per unit.

Required: Prepare all journal entries for the following:

1. Record sales for the current month including the taxes collected. (Note that the company uses a perpetual inventory system.)

2. Record the estimated warranty liability associated with the current month's sales.

3. Assume that 20 units from the sales total above were returned for repair work. The cost per unit to repair was $32. Record the entry to account for the warranty work. Assume that Pandorra pays a third party to complete the repairs.