Transaction analysis—various accounts Enter the following column headings across the top of a sheet of paper:
Transaction/ | Current | Noncurrent | Current | Noncurrent | Owners | Net |
Adjustment | Assets | Assets | Liabilities | Liabilities | Equity | Income |
Enter the transaction/adjustment letter in the first column and show the effect, if any, of each transaction/adjustment on the appropriate balance sheet category or on net income by entering for each category affected the account name and amount, and indicating whether it is an addition (+) or a subtraction (-). Items that affect net income should not also be shown as affecting owners’ equity. You may also write the journal entries to record each transaction/adjustment.
a. Income tax expense of $700 for the current period is accrued. Of the accrual, $200 represents deferred income taxes.
b. Bonds payable with a face amount of $5,000 are issued at a price of 99.
c. Of the proceeds from the bonds in part b, $3,000 is used to purchase land for future expansion.
d. Because of warranty claims, finished goods inventory costing $64 is sent to customers to replace defective products.
e. A three-month, 12% note payable with a face amount of $20,000 was signed. The bank made the loan on a discount basis.
f. The next installment of a long-term serial bond requiring an annual principal repayment of $35,000 will become due within the current year.
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