Beaufort Explorations produces and sells customized mining equipment in New Brunswick. The company offers a 60-day, all parts and labour-and an extra 90-day, parts only-warranty on all of its products. The company had the following transactions in 2014:
Jan. 31 Sales for the month totalled $80,000 (not including HST), of which 90 percent were on credit. The company collects 13-percent HST on all sales and estimates its warranty costs at 4 percent of sales.
31 Based on last year's property tax assessment, estimated that the property taxes for the year would be $60,000 (3 percent of last year's $2,000,000 assessed value).
Recorded the estimated property taxes for the month; credited Property Taxes Payable.
Feb. 4 Completed repair work for a customer. The parts ($500) and labour ($850) were all covered under the warranty. Record the labour as Wages Expense.
7 Sent a cheque for the appropriate HST for the month of January (the company had paid $3,700 of HST on purchases in January).
28 Recorded the estimated property taxes for the month of February.
28 Sales for the month totalled $92,000 (not including HST), of which 85 percent were on credit. The company estimates its warranty costs at 4 percent of sales.
Mar. 7 Sent a cheque for the appropriate HST for the month of February (the company had paid $4,750 of HST on purchases in February).
8 Beaufort Explorations received notice that it was being sued by a customer for an accident resulting from the failure of its product. The company's lawyer was reluctant to estimate the likely outcome of the lawsuit, but another customer indicated that a similar case had resulted in a $500,000 settlement.
15 Completed repair work for a customer. The parts ($2,500) and labour ($1,200) were all covered under the warranty.
21 Completed repair work for a customer. The parts ($750) were covered by the warranty, but the labour ($500) was not. Payment from the customer is due for the labour in 30 days.
31 Sales for the month totalled $88,000 (not including HST), of which 90 percent was on credit. The company estimates its warranty costs at 4 percent of sales.
31 Received the property tax assessment for 2014. It showed the assessed value of the property to be $2,200,000 and a tax rate of 3 percent of the assessed value.
The company made the appropriate adjustment and used the Property Taxes Payable account. Property tax will be paid on December 31, 2014.
Required
1. Journalize the above transactions.
2. Show the appropriate financial statement presentation for all liabilities at March 31, 2014.