Gargoyle Ltd., which has a December 31 year end, had the following transactions in December 2020 and January 2021: 2020 Dec. 1 Paid the first instalment on a five-year $7,000 bank loan. The terms of the loan stipulate that Gargoyle must repay 1/5 of the principal every December 1 plus the interest accrued to that date. The loan bears interest at 6% per annum and has been outstanding for 12 months. Dec. 31 Recorded the 2% Garbucks granted to customers as part of a loyalty program to be used on future purchases. The Garbucks was granted on eligible purchases of $410,000. Management expects that 20% of the Garbucks awarded to customers will never be redeemed. Dec. 31 Recorded employee wages for the last two days in December following the last payday. The wages earned by employees amounted to $2,100 per day and the company recorded CPP of $105, EI of $35, and income taxes of $525. Gargoyles employer contributions were $105 for CPP and $49 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. 2021 Jan. 2 Paid the wages recorded on December 31. Jan. 10 A customer used the loyalty program to make a purchase of $8,400. The cost of goods sold to the customer amounted to $3,700. Jan. 17 Made the remittance to the government related to the December 31 payroll.

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