he accounting records of

Mack's

Appliances included the following balances at the end of the period:

Accrued Warranty Payable

Sales Revenue

Warranty Expense

Beg bal

3,000

118,000

In the past,

Mack's

warranty expense has been

6%

of sales. During the current

period,

the business paid

$7,000

to satisfy the warranty claims.

Read the

requirements

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Question content area bottom

Part 1

Requirement 1. Journalize

Mack'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

Part 2

Now journalize the warranty payments.

Journal Entry
Date		Accounts	Debit	Credit

Part 3

Requirement 2. Show what

Mack's

will report on its income statement and balance sheet for this situation at the end of the period. (If an input field is not used in the statement, leave the field 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

Part 4

Now show what the company would report on its balance sheet at the end of the period.

Balance Sheet

Part 5

Requirement 3. Which data item from requirement 2 will affect the current ratio? Will

Mack's

current ratio increase or decrease due to this item?

Which data item from Requirement 2 will affect

Mack's

current ratio?

Accrued warranty payable

Sales revenue

Warranty expense

Part 6

Will

Mack's

current ratio increase or decrease as a result of an increase in this item?

Increase

Decrease