Circle whether each of the following events/transactions will (I)ncrease, (D)ecrease, or have (No) effect on total liabilities.
TOTAL LIABILITIES
(Circle the answer)
a. Purchase inventory on account. (____/ D / No)
b. Pay for the inventory purchased in (a). (I / ____/ No)
c. Sell inventory to customers for cash. (I / D / ____)
d. Issue bond payable at a discount. (____/ D / No)
e. At the end of the accounting period, record accrued interest expense on the bond payable. (____/ D / No)
f. Bond payable matures and is paid in full. (I / ____/ No)
g. Hire a new employee for an annual salary of $20,000. The employee will start next Monday. (I / D / ____)
h. The end of the accounting period is on Wednesday. Record accrued employee wage expense. Employees get paid on Friday. (____/ D / No)
i. Retirement costs for current employees are recorded. These costs will not be paid until an employee retires in a future accounting period. (____/ D / No)
j. At the end of the accounting period, estimate the amount of income taxes owed for the fiscal year. (____/ D / No)
k. Company ABC files a lawsuit. Company lawyers evaluate the case and estimate the company will probably win a substantial amount for damages. The case will be tried in a future accounting period. (I / D / ____)
l. A lawsuit is filed against Company ABC. Company lawyers evaluate the case and estimate the company will probably lose and owe a substantial amount for damages. The case will be tried in a future accounting period. (____ / D / No)