Chapter 9, Problem 22AP

a.

To determine

Calculate the following transactions.

1. (1) Amount of cash did Company R pay for interest during Year 1.
2. (2) Amount of interest expense is reported on Company R’s income statement For Year 1.
3. (3) The amount of warranty expense for Year 1.

b.

To determine

Prepare the current liabilities section of the balance sheet at December 31, Year 1.

c.

To determine

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