EXERCISE 10.3

Effects of Transactions on Various Financial Measurements

Six events relating to liabilities follow.

a.Paid the liability for interest payable accrued at the end of the last accounting period.

b.Made the current monthly payment on a 12-month installment note payable, including interest and a partial repayment of principal.

c.Issued bonds payable at 98 on March 1 of the current year. The bonds pay interest March 1 and September 1.

d.On September 1 of the current year, recorded interest expense and made semiannual interest payment on bonds referred to in partc.

e.Recorded necessary adjusting entry on December 31 of the current year for bonds referred to in partc.

f.Recorded estimated six-month warranty expense on December 31 of the current year.

Indicate the effects of each transaction or adjusting entry on the financial measurements in the five column headings listed. Use the code lettersIfor increase,Dfor decrease, andNEfor no effect.