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Indicate How Each Event Affects the Horizontal Financial Statements Model

Question 100

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Indicate how each event affects the horizontal financial statements model. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts.Increase = I Decrease = D Not Affected = NAKelly Company sells goods to customers with a three-year warranty. During Year 1, Kelly sold $800,000 of goods. On December 31, Year 1, Kelly made the appropriate year-end adjustment to record the warranty expense related to the goods sold during the year. During Year 2, Kelly paid $4,000 cash to satisfy warranty claims. Show the effects of the Year 1 adjustment to record warranty expense.
Indicate how each event affects the horizontal financial statements model. Use the following letters to record your answer in the box shown below. If an event increases one account and decreases another account equally within the same element, record I/D. If an event has no impact on the element, record NA. You do not need to enter amounts.Increase = I Decrease = D Not Affected = NAKelly Company sells goods to customers with a three-year warranty. During Year 1, Kelly sold $800,000 of goods. On December 31, Year 1, Kelly made the appropriate year-end adjustment to record the warranty expense related to the goods sold during the year. During Year 2, Kelly paid $4,000 cash to satisfy warranty claims. Show the effects of the Year 1 adjustment to record warranty expense.

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