Liabilities Owners' Equity Net Income Transactions Assets 1. Accrued accumulated vacation pay. No net effect Increase Decrease Decrease 2. Recorded sales of Increase Increase Increase Increase product and related warranties (assume service-type warranty approach). 3. Recorded estimated Decrease Increase Increase No net effect liability for premium claims outstanding. 4. Borrowed $200,000 Decrease Increase Increase No net effect from the bank by signing a 1-year, $220,000, zero-interest-bearing note. 5. Recognized 3 months' interest expense on the Increase Decrease Increase No net effect note from item 4 above. 6. Accrued warranty Increase Decrease Decrease No net effect expense (assume assurance-type warranty approach). 7. Issued an $55,000 note payable in payment on account. Decrease Increase Decrease No net effect 8. Recorded accrued Increase Increase Increase No net effect interest on a $55,000 note payable. 9. Paid warranty costs that were accrued in item 6 Decrease Decrease Decrease No net effect 10. Recorded a contingent loss on a lawsuit that the company will probably lose. Decrease Decrease Decrease Decrease 11. Recognized warranty Increase Decrease Increase Increase revenue (see item 2). 12. Purchased inventory for Increase Increase Increase Increase $120,000 on account (assume perpetual system is used). 13. Paid warranty costs Decrease Decrease Decrease No net effect under contracts from item 2. 14. Recorded employer's payroll taxes. No net effect Increase Decrease No net effect 15. Recorded an asset Increase No net effect Increase Increase retirement obligation. 16. Recorded wage expense Decrease Increase Increase No net effect of $12,000. The cash paid was $9,000; the difference was due to various amounts withheld. 17. Recorded bonuses due Decrease Increase Decrease No net effect to employees. 18. Recorded cash sales of Increase No net effect Increase Increase $26,000, plus 5% sales tax