In December Year 1, Lucas Corporation sold merchandise for $10,000 cash. Lucas estimated that the warranty obligation relating to this sale is $700. On February 12, Year 2, Lucas paid cash of $550 to settle a related warranty claim by this customer. Which of the following summarizes the effect of the recognition of the warranty obligation to the customer who purchased this merchandise on the Year 1 financial statements? Balance Sheet a. b. C. d. Assets n/a (700) (700) n/a Multiple Choice O O O = Liabilities + (700) n/a (700) 700 Option C Option A Option B Option D Stockholders' Equity 700 (700) n/a (700) Revenue 700 n/a n/a n/a Income Statement Expense n/a 700 n/a 700 = Net Income 700 (700) n/a (700) Statement of Cash Flows n/a (700) OA (700) OA n/a

In December Year 1, Lucas Corporation sold merchandise for $10,000 cash. Lucas estimated that the warranty obligation relating to this sale is $700. On February 12, Year 2, Lucas paid cash of $550 to settle a related warranty claim by this customer. Which of the following summarizes the effect of the recognition of the warranty obligation to the customer who purchased this merchandise on the Year 1 financial statements? Balance Sheet a. b. C. d. Assets n/a (700) (700) n/a Multiple Choice O O O = Liabilities + (700) n/a (700) 700 Option C Option A Option B Option D Stockholders' Equity 700 (700) n/a (700) Revenue 700 n/a n/a n/a Income Statement Expense n/a 700 n/a 700 = Net Income 700 (700) n/a (700) Statement of Cash Flows n/a (700) OA (700) OA n/a

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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