Prepare the current liabilities section of the balance sheet at December 31 , Year 1. Note: Do not round intermediate calculations. Show the effect of these transactions on the financial statements using a horizontal statements model. Indicate whether the event increases, decreases, or increa each element of the financial statements. In the Statement of Cash Flows column, designate the cash fows as operating activities (OOA), investing activities (IA), activities (FA). The first transaction has been recorded as an example. Note: Leave cells blank if no input is needed. a. Answer the following questions: 1. What amount of cast did Ripley pay for interest during Year 1? 2. What amount of interest expense is reported on Ripley's income statement for Year 1 ? 3. What is the amount of warranty expense for Year 1? b. Prepare the current liabilities section of the balance sheet at December 31, Year 1. c. Show the effect of these transactions on the financial statements using a horizontal 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 activities (OA), investing activities (IA), or financing activities (FA). The first transaction has been recorded as an example. Complete this question by entering your answers in the tabs below. 1. What amount of cash did Ripley pay for interest during Year i? 2. What amount of interest expense is reported on Ripley's income statement for Year 1 ? 3. What is the amount of warranty expense for Year i? Note: For all requirements, do not round intermediate calculations. Round your final answers to nearest whole dollar ameunt. The following selected transactions were taken from the books of Ripley Company for Year 1 : 1. On February 1, Year 1, borrowed $59,000 cash from the Jocal bank. The noto had a 6 percent interest rate and was due on June 1, Yoar 1. 2. Cash sales for the year amounted to $235,000 plus sales tax ot the rate of 5 percent. 3. Ripley provides a 90 -day warranty on the merchandise sold. The warranty expense is estimated to be 2 percent of sales. 4. Paid the sales tax to the state sales tax agency on $185,000 of the sales. 5. Paid the note due on June 1 and the related interest. Record accrued interest as transaction 5a and the repayment of the principal of the note and applicable interest as transaction 5b 6. On November 1, Year 1, borrowed $40,000 cash from the local bank. The note had a 10 percent interest rate and a one-year term to maturity. 7. Paid $3,800 in warranty repairs: 8. A customer has fled a lawsuit against Ripley for $11 miltion for breach of contract. The company attorney does not believe the suit has merit. Required a. Answer the following questions: 1. What amount of cash did Ripley pay for interest during Year 1 ? 2. What amount of interest expense is reported on Ripley's income statement for Year 1? 3. What is the amount of warranty expense for Year 1? b. Prepare the current liabilities section of the balance sheet at December 31, Year 1. c. Show the effect of these transactions on the financial statements using a horizontal 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 activities (OA), investing octivities (IA), or financing activities (FA). The first transaction has been recorded as an example. Complete this question by entering your answers in the tabs below. Show the effoct of these transactions on the financial statements using a horizontal statements model, Indicate whether the event increases, decreases, or increases and each eiement of the financial statements. In the Statement of Cash Flows column, designate the cash flows as operating activities (OA), investing activities (IA), or finan activities (FA). The first transaction has been recorded as an example. activises (FA), The first transaction has been Note: Leave cells blank if no input is needed
