The following selected transactions of MMP Limited (a Canadian private corporation) were completed during the fiscal year ended December 31, 2019 and the month of January, 2020:

2019

Mar 1 Borrowed cash (calculate this amount!) by signing a $20,000, one year, non-interest bearing note. The market rate of interest on similar types of debt was 8% at this time.

Nov 1 MMP Limited began selling a product with a three-year warranty. Warranty costs are estimated to be 2% of sales in the first year, 5% in the second year and 5% in third year, subsequent to sale. For the months of November and December, the total sales were $233,800 (ignore HST and the COGS component of the sales transaction when recording the journal entry). The actual warranty costs incurred during this time were $3,740 for repair parts. To promote the sales of this product, the company sold it with a coupon offer. For every dollar of sales, the customer receives a coupon. Upon the redemption of 1,000 coupons, the customer will receive a free T-shirt. On November 1, MMP Limited purchased 100 T-shirts on credit at a cost of $8.88 per T-shirt (ignore HST on the purchase of the T- shirts). The company estimated that 32% of the coupons issued would be redeemed. As at December 31, 2018, 52 T-shirts had been distributed to customers.

Dec 22 Declared dividends in the amount of $12,000. The dividends are to be paid on or before February 28, 2020. [You must indicate in the liability account(s) which class(es) of shareholders the dividends are payable to]. MMP Limited has the following share capital structure: $2, Cumulative and non-participating preferred shares, 3,000 shares issued and outstanding Common shares, 10,000 shares issued and outstanding Dividends in arrears on preferred shares were $4,000 as at December 31, 2018.

Dec 28 The companys payroll journal indicated the following information for the month of December, for salaries earned up to and including December 28, 2019. Gross salaries and wages $ 120,000

CPP withheld 3,200

EI withheld 3,460

Income tax withheld 38,000

Union dues withheld 1,200

Dec 29 - 31 Total salaries and wages earned (by employees) were $3,800 per day. (Do not worry about the CPP and EI)

During the month of December, a customer slipped and fell on the ice at the front door of MMP Limited's office building. This resulted in a severe injury to the customer. The customer is suing MMP Limited for $100,000 damages. It is the opinion of the company's legal counsel that it is highly probable that damages will be assessed in an out-of-court settlement in the amount of $60,000.

2020

Jan 15 Paid the remittance due to the Receiver General for Canada for deductions withheld for the month of December 2019.

Feb 28 Paid the $20,000 note dated March 1, 2019.

Required: (1) Prepare journal entries to record all of the above transactions, including all necessary year-end adjusting entries for the year ended December 31, 2019.

PLEASE SHOW RELEVANT CALCULATIONS !!!

(2) Prepare any necessary notes to the financial statements for the year ended December 31, 2019. (You may use point form for this).