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Superior Skateboard Company, located in Ontario, is preparing adjusting entries at December 31, 2020. An analysis reveals the

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Answer:- Journal entries Dec 31, 2020:

a.

Warranty Expense………………………………………

14,490

Estimated Warranty Liability............................................

14,490

To record warranty expense;
6,900 units × 5% × $42 = $14,490.

b.

No adjusting entry can be made since the loss cannot be reasonably estimated. The notes to the financial statements must mention the suit as a contingent liability.

c.

Cash........................................................................................... 2,418,200

Sales Revenue................................................................. 2,140,000

HST Payable....................................................................   278,200

   To record sales plus HST: $2,140,000 × 13% = $278,200.

Note : Applicable HST is 13% .

​​​​​​ Cost of Goods Sold...................................................................  1,284,000

Merchandise Inventory.....................................................     1,284,000

   To record cost of sales;

$2,140,000 × 60% = $1,284,000.

d.

Unearned Product Revenue .................................................................. 99,000

Earned Product Revenue......................................... 99,000

To record earned portion of unearned revenue.

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