The North Pole Toy Factory is gearing up for the holiday season. The following transactions and events have occurred:

Dec. 1	Borrowed $18,000 from the Arctic Bank for three years, at 5% interest. Interest is due on the first day of every month, starting on January 1 next year.
Dec. 5	Hired seven elves to package toys (they start work tomorrow) and nine reindeer to deliver them on Christmas Eve.
Dec. 24	Since they were hired, the seven elves have worked for 12 days each, 7.5 hours per day, and today Santa pays them $25 per hour.
Dec. 24	As the North Pole is in Canada, Santa has deducted the following in total from the elves' pay: EIT $2300; CPP $650; and EI $400. The appropriate employer portion is also accrued
Dec. 26	The deliveries were successful and the reindeer are paid with apples, oats, honey, and whatever milk and cookies Santa was able to take away.
Dec. 28	Santa's accountants, Scrooge, Grinch & Partners, tell Santa that he owes $6000 for last year's income taxes. He has not paid this amount yet. It will be paid in April.
Dec. 31	The first interest amount on the loan, due tomorrow, is accrued.
Jan. 1	The bank deducts the interest from Santa's account.
Jan. 15	Santa pays Revenue Canada the amount owed with respect to the elves' payroll.

REQUIRED:

Use an accounting chart to analyze the above transactions, and then answer the following questions.

How much interest does Santa pay on January 1? (2 marks)

Which accounts will be affected, and how, by the January 15 payment? S (4 marks)

a. Cash, CPP Payable, EI Payable, and EIT Payable all decrease, and Wages Expense increases

b. Cash, CPP Payable. EI Payable, and EIT Payable all decrease, and Wages Expense increases

c. Cash, CPP Payable, EI Payable, and Income Tax Payable all decrease

d. Cash, CPP Payable. EI Payable, and Income Tax Payable all decrease, and Employee Benefits Expense increases

e. Cash, CPP Payable, EI Payable, and EIT Payable all decrease, and Employee Benefits Expense increases

f. Cash, CPP Payable, EI Payable, and EIT Payable all decrease

g. Cash, CPP Payable, EI Payable, and EIT Payable all decrease, and Wages Expense and Employee Benefits Expense both increase

h. Cash and Employee Benefits Payable both decrease

Enter the letter corresponding to your choice. Enter the letter without a period. (a b c d e f g h)