Exercise 9-7A 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 $1,150. During this period, a customer returned a product that cost $863 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.) (Note: Not all cells will require an input.) CHAIR COMPANY Horizontal Statements Model Income Statement Balance Sheet Stockholder's = Liabilities Equity Statement of Cash Flows Event Assets Revenue Expense = Net Income Estimates + Paid 11 +