Transaction Analysis (Balance Sheet Accounts)
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Enter the following column headings across the top of a sheet of paper:
Current Assets, Noncurrent Assets, Current Liabilities, Long Term Debt, Owners' Equity and Net Income
Enter the transaction/adjustment letter in the first column, and show the effect, if any, of each of the transactions/adjustments on the appropriate balance sheet category or on the income statement by entering the amount and indicating whether it is an addition(+) or a subtraction (-). In addition, write the journal entries to record each transaction/adjustment.
a. Wages of $768 accrued at the end of the prior fiscal period were paid this fiscal period.
b. Real estate taxes of $2400 applicable to the current period have not been accrued.
c. Interest on bonds payable has not been accrued for the current month. The company has outstanding $360000 of 7.5% bonds.
d. The premium related to the bonds in part c has not been amortized for the current month. The current-month amortization is $70.
e. Based on past experience with its warranty program, the estimated warranty expense for the current period should be 0.2% of sales of $918,000.
f. Analysis of the company's income taxes indicates that taxes currently payable are $76,000 and that the deferred tax liability should be increased by $21,000.
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Solution Summary
This solution identifies the effects of each transaction and provides appropriate journal entries.
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