1. On December 31, 2016, Warren Co. accrued $625 of interest on a $25,000 note it had issued from the National Bank on July 1, 2016. The principal and interest on the note are to be repaid on June 30, 2017. How would Warrens's year-end adjustment to accrue the interest on the loan affect its financial statements for 2016?
2. Gilliam Co. repaid a note payable on September 30, 2016. The 8-month note had been issued on February 1, 2016. The $20,800 cash payment included a $20,000 repayment of principal and an $800 payment for interest.
3. Joseph Company issued a one-year, 6% note to Community Bank.
4. On April 1, 2017, Jenkins Company repaid a $20,000, one-year, 6% note and interest to Community Bank. Interest on the note had been accrued on December 31, 2016.
5. Allen Co. purchased a $30,000 machine by making a $5,000 cash down payment and issuing a $25,000 note payable for the remaining balance.
6. Pearl Company sold merchandise to a customer for $800 cash in a state where the sales tax rate is 5%. (Ignore the effect of cost of goods sold.)
7. Ping Company made its remittance to the state sales tax authority.
8. Sierra Mining is the defendant in a $3 million lawsuit involving damage to the environment. Sierra's attorneys have advised the company that the outcome of the lawsuit is reasonably possible, but not probable.
9. Sierra Mining is the defendant in a $3 million lawsuit involving damage to the environment. Sierra's attorneys have advised the company that the outcome of the lawsuit is probable, and the likely settlement will be $750 thousand.
10. Kelly Co. sells goods to customers with a three-year warranty. During 2015, Kelly 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 2015 adjustment to record warranty expense.