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Situation 1 Rad Co. manufactures and sells heating and air conditioning systems. Rad Co is a public company. On September 1, 2021 Rad sold 20
Situation 1 Rad Co. manufactures and sells heating and air conditioning systems. Rad Co is a public company. On September 1, 2021 Rad sold 20 heating systems to Heating Rental Company for $50,000 (on credit). The cost of the heating systems sold was $1,000 each. Heating Rental Company is a new customer. Rad offers a 60-day return policy. Based on past experience usually 5% of the systems will be returned. Prepare the journal entries for September 1". (6 marks) Situation 2 Woodworking Inc. is a private company. The custom build furniture. On June 1, 2021 Jill Wong signs a contract for Woodworking Inc. to build her a custom dining room set. She has to pay 15% on signed of the contract and will pay the balance on deliver on August 1, 2021. The selling price was $10,000 and the cost to build the furniture was $2,800. Prepare the journal entries for June 1" and August 1". (7 marks) Situation 3 Supersonic Inc. buy and sells washing machines and dryers across the GTA. Product Selling Price (alone) Washing machine Installation I $1,302 155 93 Cost $450 Maintenance . . . On May 1, 2021 Mohammad orders a washing machine, installation and one-year maintenance plan for a total price of $1460. On June 1 Supersonic delivers the washing machine and bills the customer for the washing machine. The terms is 30 days. On June 2d the customer pays for the one-year maintenance plan. On June 4 Supersonic installs the machine. On July 1 since the customer didn't pay their bill for the washing machine or installation so they convert the accounts to a one-year interest bearing note that charges a 4% annual interest rate. Prepare any necessary journal entries for 2021 including any year-end adjusting entries (18 marks)
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