GBC Ltd. Had the following two transactions in the month of December. Dec...
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Accounting
GBC Ltd. Had the following two transactions in the month of December.
Dec 1 Signed a $60,000, 120 day, 6% note payable to TD Bank receiving $60,000 cash.
Dec 10 A customer brought in a defective product which was covered under the warranty agreement. It cost GBC Ltd. $200 in parts and $150 in labour to fix the product. The labour was paid in cash.
Required: 1. Prepare the above journal entries.
2. Prepare the adjusting journal entry to accrue interest expense on the promissory note on December 31, the year end of the company.
3. Prepare the journal entry to record the estimated warranty liability. To estimate warranty liability, GBC Ltd. takes 5% of the units sold at an average cost to fix the unit of $300. There were 2,000 units sold in the month.
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