Question
The accounting records of Clay?'s Appliances included the following balances at the end of the? period: Estimated Warrenty Payable Beg Bal 3000 Sales Revenue 110,000
The accounting records of Clay?'s Appliances included the following balances at the end of the? period:
Estimated Warrenty Payable
Beg Bal 3000 |
Sales Revenue
110,000 |
Warranty Expense
In the? past,Clay?'s warranty expense has been 7% of sales. During the current period?, the business paid $4,000 to satisfy the warranty claims.
(The accounts to choose from in a-b are Accounts payable, Cash, Estimated warranty payable, Sales Revenue, Sales tax payable, and Warranty expense.)
a) Journalize Clay?'s warranty expense
b) Journalize the warranty payments
c) Show what the company would report on its income statement at the end of the period. (Choose from Estimated warranty payable, Sales Revenue, and Warranty Expense.)
d) Show what the company would report on its balance sheet at the end of the period. (Choose from Current Assets, Current Liabilities, Estimated warranty payable, Sales Revenue, and Warranty expense.)
e) Which data item will affect Clay?'s current? ratio? (Choose from Estimated warranty payable, Sales revenue, and Warranty expense.)
f) Will Clay?'s current ratio increase or decrease as a result of an increase in the item from (e)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started