Exercise $7-7$A $($Algo$)$ Effect of warranty obligations and payments on financial statements LO $7-4$

The Chair Company provides a $120-$day parts and$-$labor warranty on all merchandise it sells. The Chair Company estimates the waranty expense for the current period to be $$1,10.$ During the period a customer returned a product that cost $$833$ to repair.

Required:

a$.$ Show the effects of these transactions on the financial statements using a honizontal statements model, Indicate whether the event increases, decreases, or increases and decreases each element of the financial statements. In the Statement of Cash flows column, designate the cash flows as operating activiles $($OA$),$ investing activities $($IA$),$ or financing actbvities $($FA$).$

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