Exercise $9-7$A $($Algo$)$ Effect of warranty obligations and payments on financial statements LO $9-4$

The Chair Company provides a $120-$day parts$-$and$-$labor warranty on all merchandise it sells. The Chair Company estimates the warranty expense for the current period to be $$1,280.$ During this period, a customer returned a product that cost $$960$ to repair.

Required

a$.$ Show the effects of these transactions on the financial statements using a horizontal statements model. $($Use a $+$ to indicate increase or a $$ for decrease. In the Statement of Cash Flows column, indicate whether the item is an operating activity $($OA$),$ investing activity $($IA$),$ or financing activity $($FA$).$ Columns for events that have no effect on any of the elements should be left blank.$)$