The Wolf Appliance Co. provides a 120-day parts-and-labor warranty on all merchandise it sells. Wolf estimates the warranty expense for the current period to be $1,230. During the period a customer returned a product that cost $923 to repair.

Required

a.

Show the effects of these transactions on the financial statements using a horizontal statements model like the example shown here. Use a + to indicate increase, a for decrease, and NA for not affected. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), financing activity (FA) and NA for not affected.

WOLF APPLIANCE CO. Horizontal Statements Model Balance Sheet Income Statement Stockiolces Equity Statement of Cash Flow Stockholder's Revenue Expense Event Estimates Paid Assets = Liabilities + Stockholder's = Net Income