Indicate How Each Event Affects the Elements of Financial Statements

question 31

Essay

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts.Enter only one letter for each element.

-Kelly Co.sells goods to customers with a three-year warranty.During 2015,Kirk sold $800,000 of goods.On December 31,2015,Kelly made the appropriate year-end adjustment to record the warranty expense related to the goods sold during the year.During 2016,Kelly paid $4,000 cash to satisfy warranty claims.Show the effects of the 2016 payments to satisfy warranty claims.

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Definitions:

Legal Control

The power or authority to direct the management and policies of a company or organization, typically through ownership of voting shares or by contract.

Trade Payables

Money owed by a business to its suppliers or creditors for goods and services purchased on credit.

Financial Manager

A professional responsible for the financial health of an organization, involving financial planning, management of financial risks, and financial report analysis.

Marketable Securities

Financial instruments that can be easily bought or sold on public exchanges or markets due to their high liquidity and short-term maturity.