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Toowong Pty Ltd has an accounting financial year which ends on 30 June. The company pays the weekly payroll every Friday. The record indicates the
Toowong Pty Ltd has an accounting financial year which ends on 30 June. The company pays the weekly payroll every Friday. The record indicates the following salary costs were incurred. Monday Tuesday Wednesday Thursday Friday Date 29 June 2020 30 June 2020 1 July 2020 2 July 2020 3 July 2020 Amount $ 2,100 2,200 2,400 2,300 1,900 Toowong Pty Ltd uses the allowance method to record bad debts expense. Accountants estimated that 2% of its accounts receivable will be uncollectable. Accounts receivable at 30 June are $ 75,000 and the unadjusted balance in the allowance for doubtful debts account is debit of $ 1,000. Accountants also estimated that the expected future obligations for warranty will be $ 25,000. The unadjusted balance in the provision for warranty account is credit of $ 10,000. Required: (A) Prepare any necessary adjusting journal entries that should be made at year ended on 30 June 2020 for payroll related expenses. (B) Prepare the journal entry to record the payment of the weekly payroll on 3 July 2020. (C) Prepare the adjusting journal entry to record bad debts expense for the year ended on 30 June 2020. (D) Prepare the adjusting journal entry to record liabilities for outstanding warranties for the year ended on 30 June 2020. (E) On 31 July 2020, Toowong Pty Ltd provides a new product to a customer when she files a claim for a faulty product under warranty. The cost of a new product is $ 200. Prepare the journal entry to record this transaction. Note: i. If you believe no journal entry is required, explain the reason(s). ii. Ignore the effect of GST. iii. Ignore Pay-as-you-go (PAYG) tax payable for (A) and (B). Narrations are not required for journal entries. Toowong Pty Ltd's chart of accounts includes these accounts - Cash, Inventory, Allowance for doubtful debts, Accounts payable, Salaries payable, Warranty provision, Sales Revenue, Bad debts expense, Salaries expense, and Warranty expense. Toowong Pty Ltd uses the Allowance Method to value accounts receivable. a iv. V. vi
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