The accounting records of Audio-Video Inc. included the following balances before the year-end adjustments: In the past,

Question:

The accounting records of Audio-Video Inc. included the following balances before the year-end adjustments:

In the past, Audio-Video's warranty expense has been 6% of sales. During the current period, the business paid $9,400 to satisfy the warranty claims of customers.
Requirements
1. Record Audio-Video's warranty expense for the period and the company's cash payments to satisfy warranty claims. Explanations are not required.
2. Show everything Audio-Video will report on its income statement and balance sheet for this situation.
3. Which data item from Requirement 2 will affect Audio-Video's current ratio? Will Audio- Video's current ratio increase or decrease as a result of this item?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...