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Part A. (4 Marks). Ace Appliances Inc. offers a 12-month warranty on all its appliances. Ace Appliances estimates that one appliance out of each 1000 sold will require warranty service and that the average cost per warranty claim is $200. Ace sold 30,000 appliances during 2020.The estimated warranty liability at the beginning of the year was $ 3,000. Claims of $7,000 were actually paid during the year to honour warranties. Ace Appliances has a December 31 year-end.

Required:

1. Calculate the estimated warranty expense for Ace Appliances for 2020.(2 marks)

________________

2. Calculate the balance of the Estimated Warranty Liability account at December 31, 2020.(2 marks)

___________________

Part B. (4 Marks). For the month of November 2020, Ace Appliances recorded

$ 280,000 in sales, which were all on account. The company is required to charge 7% PST and 6% GST on all sales.

Required: Prepare the journal entry to record the companys sales activity for November 2020.

	Debit	Credit

Part C (4 marks). On September 30, 2020, Ace Appliances (above) borrowed $200,000 from the Peoples National Bank on a nine-month, 8% note.

Required: Give the journal entry on June 30, 2021 when the note is paid by Ace Appliances.

	Debit	Credit

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