Chapter 7, Problem 7.21E

Exercise 7.21

LO 4. 5, 8

Transaction analysis-various accounts Enter the following column headings across the top of a sheet of paper:

Transaction/Adjustment Current Assets Current Liabilities Long-Term Debt 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 category⁷ or on the income statement by entering the amount and indicating whether it is an addition (+) or a subtraction (-). You may also write the journal entries to record each transaction/adjustment.

1. Wages of S465 for the last three days of the fiscal period have not been accrued.
2. Interest of $340 on a hank loan has not been accrued.
3. Interest on bonds payable has not been accrued for the current month. The company has outstanding $480,000 of 6.5% bonds.
4. The discount related to the bonds in part c has not been amortized for the current month. The current month amortization is $150.
5. Product warranties were honored during the month; parts inventory items valued at $1,660 were sent to customers making claims, and cash refunds of $820 were also made.
6. During the fiscal period, advance payments from customers totaling $3,000 were received and recorded as sales revenues. The items will not be delivered to the customers until the next fiscal period. Record the appropriate adjustment.