The following selected transactions were taken from the books of Ripley Company for Year 1: 1. On February 1, Year 1, borrowed $57,000 cash from the local bank. The note had a 8 percent interest rate and was due on June 1, Year 1. 2. Cash sales for the year amounted to $220,000 plus sales tax at the rate of 8 percent. 3. Ripley provides a 90-day warranty on the merchandise sold. The warranty expense is estimated to be 3 percent of sales. 4. Paid the sales tax to the state sales tax agency on $205,000 of the sales. 5. Paid the note due on June 1 and the related interest. 6. On November 1, Year 1, borrowed $50,000 cash from the local bank. The note had a 9 percent interest rate and a one-year term to maturity. 7. Paid $3,500 in warranty repairs. 8. A customer has filed a lawsuit against Ripley for $130,000 for breach of contract. The company attorney does not believe the suit has merit. Required a. Answer the following questions: 1. What amount of cash did Ripley pay for interest during Year 1? 2. What amount of interest expense is reported on Ripley's income statement for Year 1? 3. What is the amount of warranty expense for Year 1? b. Post the liabilities transactions to T-accounts and prepare the current liabilities section of the balance sheet at December 31, Year 1 c. Show the effect of these transactions on the financial statements using a horizontal statements model like the one shown next. Use + for increase, - for decrease, and NA for not affected. In the Cash Flow column, indicate whether the item is an operating activity (OF investing activity (IA), or financing activity (FA) or not affected (NA). The first transaction has been recorded as an example.

Rosewood Company made a loan of $11,600 to one of the company's employees on April 1, Year 1. The one-year note carried a 6% rate of interest. What is the amount of interest revenue that Rosewood would report in Year 1 and Year 2, respectively? Multiple Choice $696 in Year 1 and $0 in Year 2 $0 in Year 1 and $696 in Year 2 О $174 in Year 1 and $522 in Year 2

Geary Corporation had the following transactions: Apr. 15 - Issued a $6,000, 60-day, eight percent note payable in payment of an account with Marion Company. May 22 - Borrowed $50,000 from Sinclair Bank, signing a 60-day note at nine percent. June 14 - Paid Marion Company the principal and interest due on the April 15th note payable. July 13 - Purchased $15,000 of merchandise from Sharp Company; signed a 90-day note with eight percent interest. July 21 - Paid the May 22 note due to Sinclair Bank. Oct 02 - Borrowed $38,000 from Sinclair Bank, signing a 120-day note at twelve percent interest. Oct 11 - Paid the note payable and accrued interest to the Sharp Company (July 13).                         Record these transactions in general journal form. Record any adjusting entries for interest in general journal form. Geary Corporation has a December 31 year-end.

Puzzles Company sells merchandise with a 1-year warranty. In Year 1, sales consisted of 3,700 units. It is estimated that warranty repairs will average $16 per unit sold, and 40% of the repairs will be made in Year 1 and 60% in Year 2. In the income statement for Year 1, Puzzles Company should show warranty expense of a. $35,520. b. $23,680. c. $0. d. $59,200.