Presented below is a list of possible transactions.
Analyze the effect of the 18 transactions on the financialstatement categories indicated.
Transactions
Assets
Liabilities
Owners’ Equity
Net Income
1.
Purchased inventory for $80,000 on account (assume perpetualsystem is used).
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
2.
Issued an $80,000 note payable in payment on account (see item1 above).
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
3.
Recorded accrued interest on the note from item 2 above.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
4.
Borrowed $100,000 from the bank by signing a 6-month, $112,000,zero-interest-bearing note.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
5.
Recognized 4 months’ interest expense on the note from item 4above.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
6.
Recorded cash sales of $75,260, which includes 6% salestax.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
7.
Recorded wage expense of $35,000. The cash paid was $25,000;the difference was due to various amounts withheld.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
8.
Recorded employer’s payroll taxes.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
9.
Accrued accumulated vacation pay.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
10.
Recorded an asset retirement obligation.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
11.
Recorded bonuses due to employees.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
12.
Recorded a contingent loss on a lawsuit that the company willprobably lose.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
13.
Accrued warranty expense (assume expense warrantyapproach).
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
14.
Paid warranty costs that were accrued in item 13 above.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
15.
Recorded sales of product and related service-typewarranties.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
16.
Paid warranty costs under contracts from item 15 above.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
17.
Recognized warranty revenue (see item 15 above).
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
18.
Recorded estimated liability for premium claimsoutstanding.
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
DecreaseIncreaseNo net effect
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