Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 93

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

Transaction/	Current	Current	Long-Term	Net
Adjustment	Assets	Liabilities	Debt	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 (-). You may also 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.

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b. Real estate taxes of $2,400 applicable to the current period have not been accrued.

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c. Interest on bonds payable has not been accrued for the current month. The company has outstanding $360,000 of 7.5% bonds.

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d. The premium related to the bonds in part c has not been amortized for the current month. The current-month amortization is $70.

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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.

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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.

Step 1 of 2

Transaction analysis–Various accounts

The horizontal model presentation for the provided transactions with prescribed headings is as follows: