Question

Lyrtricks Ltd., which has a December 31 year end, had the following transactions in December 2020 and January 2021: 2020 Dec. 1 Dec. 31 The company borrowed $135,000 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 8% per annum. Recorded employee wages for December. The wages earned by employees amounted to $9,300, and the company withheld CPP of $536, EI of $452, and income taxes of $2,000. Lyrtricks' employer contributions were $536 for CPP and $633 for EI. Recorded the adjusting entry to record the interest incurred on the bank loan during December. Recorded the entry to reclassify the current portion of the bank loan. Dec. 31 Dec. 31 2021 Jan. 2 Jan. 15 Paid the wages recorded on December 31. Made the remittance to the government related to the December 31 payroll.

Answer 1

Date	Account and Explanation	Debit	Credit
Dec. 1	Cash	135000
	Bank loan payable		135000
Dec. 31	Wages expense	9300
	CPP Payable		536
	EI Payable		452
	Employee income taxes payable		2000
	Wages payable		6312
	(To record wages payable)
	Wages expense	1169
	CPP Payable		536
	EI Payable		633
	(To record employer's liabilities)
Dec. 31	Interest expense ($135000 x 8% x 1/12)	900
	Interest payable		900
	(To record interest)
	Bank loan payable ($135000 x 1/5)	27000
	Bank loan payable-current portion		27000
	(To record reclassification of current portion of bank loan)
2021
Jan. 2	Wages payable	6312
	Cash		6312
Jan. 15	CPP Payable ($536 + $536)	1072
	EI Payable ($452 + $633)	1085
	Employee income taxes payable	2000
	Cash		4157