Toyota, the car manufacturer, guarantees its vehicles for three years or 100,000 kilometres, whichever comes first. Suppose Toyota's experience indicates that it can expect warranty costs to equal to 3% of sales. Assume that Thomson Toyota in Adelaide makes sales of Toyota Corollas totalling $500,000 during 2018, its first year of operations. The business receives cash for 30% of the sales and loans receivable for the remainder. Payments to satisfy customer warranty claims totalled $10,000 during 2018. (These payments are reimbursed by Toyota.)

Required

1. Record the journal entries for sales, warranty expense and warranty payments for Thomson Toyota.

2. Post to the estimated warranty payable T-account.

3. At the end of 2018, how much in warranty costs does Thomson Toyota still expect to pay?

Consider the following note payable transactions of Tube Video Productions: 2017 March 1 Purchased equipment costing $80,000 by issuing an eight-year, 12% unsecured note payable. The note requires annual principal payments of $10,000 plus interest each 1 March.

March 1 Recorded current portion of the note in the journal.

December 31 Accrued interest on the note payable. 2018

March 1 Paid the first instalment on the note.

December 31 Accrued interest on the note payable. Required 1.

Journalise the transactions for the business. 2. Considering the given transactions only, what are Tube Video Productions' total liabilities on 31 December 2018?

Steven Fu has just approached a venture capitalist for financing for his new business venture, the development of a wireless golf buggy. On 1 July 2017, Steven borrowed $200 000 at an annual interest rate of 12%. The loan is repayable over 5 years in annual instalments of $55 480, principal and interest, due on 30 June each year. The first payment is due on 30 June 2018. Steven uses the effective-interest method for amortising debt. His wireless golf buggy entity's year-end will be 30 June. Required 1. Prepare a mortgage schedule for the 5 years, 2017-2022. Round all calculations to the nearest dollar. 2. Prepare all journal entries for Steven Fu for the first 2 fiscal years ended 30 June 2018 and 30 June 2019. Round all calculations to the nearest dollar. 3. Show the statement of financial position presentation of the loan payable as of 30 June 2019. (Hint: Be sure to distinguish between the current and long-term portions of the loan.)