The following is a list of possible transactions 1 Purchased inventory
The following is a list of possible transactions.
1. Purchased inventory for $80,000 on account (assume perpetual system is used).
2. Issued an $80,000 note payable in payment of an account (see item 1 above).
3. Recorded accrued interest on the note from item 2 above.
4. Borrowed $100,000 from the bank by signing a $112,000, six-month, non-interest-bearing note.
5. Recognized four months of interest expense on the note from item 4 above.
6. Recorded cash sales of $75,260, which includes 6% sales tax.
7. Recorded wage expense of $35,000. The cash paid was $25,000; the difference was due to various amounts withheld.
8. Recorded employer’s payroll taxes.
9. Accrued accumulated vacation pay.
10. Signed a $2-million contract with Construction Corp. to build a new plant.
11. Recorded bonuses due to employees.
12. Recorded a contingent loss on a lawsuit that the company will probably lose.
13. Accrued warranty expense (assume expense warranty approach).
14. Paid warranty costs that were accrued in item 13 above.
15. Recorded sales of product and separately sold warranties.
16. Paid warranty costs under contracts from item 15 above.
17. Recognized warranty revenue (see item 15 above).
18. Recorded estimated liability for premium claims outstanding.
19. Recorded the receipt of a cash down payment on services to be performed in the next accounting period.
20. Received the remainder of the contracted amount and performed the services related to item 19 above.
Set up a table using the format that follows and analyze the effects of the 20 transactions on the financial statement categories in the table using private entity GAAP. Use the following codes: increase (I), decrease (D), or no net effect (NE).
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