Question

Lyrtricks Ltd., which has a December 31 year end, had the following transactions in December 2016 and January 2017:
2016
Dec. 1 The company borrowed $100,000 from a bank on a five-year loan payable. The terms of the loan stipulate that Lyrtricks must repay 1/5 of the principal every November 30 plus the interest accrued to that date. The loan bears interest at 9% per annum.
Dec. 31 Accrued warranty expense, which is estimated at 2% of sales for the month of $145,000.
Dec. 31 Recorded employee wages for December. The wages earned by employees amounted to $10,000 and the company withheld CPP of $576, EI of $486, and income taxes of $2,200. Lyrtricks’ employer contributions were $576 for CPP and $680 for EI.
Dec. 31 Recorded the adjusting entry to record the interest incurred on the bank loan during December.
Dec. 31 Recorded the entry to reclassify the current portion of the bank loan.
2017
Jan. 2 The Company paid the wages recorded on December 31.
Jan. 10 A customer returned a defective product that was still under warranty. The product was not usable and the customer requested and received a full refund in the amount of $800.
Jan. 15 Made the remittance to the government related to the December 31 payroll.
Required:
Prepare all necessary journal entries related to the above transactions.


$1.99
Sales2
Views108
Comments0
  • CreatedJune 11, 2015
  • Files Included
Post your question
5000