The accounting records of Water's Appliances included the following balances at the end of the period:...
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The accounting records of Water's Appliances included the following balances at the end of the period: Accrued Warranty Payable Sales Revenue Warranty Expense Beg bal 2,500 114.000 In the past, Water's warranty expense has been 8% of sales. During the current period, the business paid $4,000 to satisfy the warranty claims. Read the requirements. Requirement 1. Journalize Water's warranty expense for the period and the company's cash payments to satisfy warranty claims. Explanations are not required. Start by journalizing the warranty expense. (Record debits first, then credits. Exclude explanations from journal entries.) Journal Entry Date Accounts Debit Credit Now journalize the warranty payments. Journal Entry Date Accounts Debit Credit Requirement 2. Show what Water's will report on its income statement and balance sheet for this situation at the end of the period. (If a box is not used in the statement, leave the box empty; do not select a label or enter a zero.) Begin by showing what the company would report on its income statement at the end of the period. Income Statement Now show what the company would report on its balance sheet at the end of the period. Balance Sheet Requirement 3. Which data item from requirement 2 will affect the current ratio? Will Water's current ratio increase or decrease due to this item? Which data item from Requirement 2 will affect Water's current ratio? Will Water's current ratio increase or decrease as a result of an increase in this item? The accounting records of Water's Appliances included the following balances at the end of the period: Accrued Warranty Payable Sales Revenue Warranty Expense Beg bal 2,500 114.000 In the past, Water's warranty expense has been 8% of sales. During the current period, the business paid $4,000 to satisfy the warranty claims. Read the requirements. Requirement 1. Journalize Water's warranty expense for the period and the company's cash payments to satisfy warranty claims. Explanations are not required. Start by journalizing the warranty expense. (Record debits first, then credits. Exclude explanations from journal entries.) Journal Entry Date Accounts Debit Credit Now journalize the warranty payments. Journal Entry Date Accounts Debit Credit Requirement 2. Show what Water's will report on its income statement and balance sheet for this situation at the end of the period. (If a box is not used in the statement, leave the box empty; do not select a label or enter a zero.) Begin by showing what the company would report on its income statement at the end of the period. Income Statement Now show what the company would report on its balance sheet at the end of the period. Balance Sheet Requirement 3. Which data item from requirement 2 will affect the current ratio? Will Water's current ratio increase or decrease due to this item? Which data item from Requirement 2 will affect Water's current ratio? Will Water's current ratio increase or decrease as a result of an increase in this item?
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Related Book For
Financial Accounting
ISBN: 978-0133427530
10th edition
Authors: Walter Harrison, Charles Horngren, William Thomas
Posted Date:
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