Question

i need help with c and d

Exercise 10-18 Various liabilities 102,4 CHECK FIGURE: C. HST Payable = $275,000 Superior Skateboard Company, locutin Ontario, is preparing adjusting entries at December 31, 2020. An analysis reveals the following: a. During December, Superior sold 0,500 skateboards that carry a 60-day warranty. The skateboard sales totalled $390,000. The company expects 8% of the skateboards will need repair under warranty and it estimates that the average repair cost per unit will be $38, b. A disgruntled employee is suing the company. Legal advisers believe that it is probable that Superior will have to pay damages, the amount of which cannot be reasonably estimated. c. Superior needs to record previously unrecorded cash sales of $2,100,000 (cost of sales 65%) plus applicable HST. a. Superior recognizes that $95,000 of $160,000 received in advance for skateboards has now been earned required Prepare any required adjusting entries at December 31, 2020, for each of the above.

Answer 1

(c) cash account dr 2373000

cost of goods sold account dr 1365000

to sales account    2100000

to inventory account 1365000

to hst payable account    273000

(being unrecorded sales now recorded with 13 percent hst)

(d) advance received account dr 255000

to sales account 255000

(being advance received for skateboards now recognized)

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