Tom Tom Toys, Incorporated has sales of $500,000 in Year 1. Tom Tom warrants its products and estimates warranty expense to be 2% of sales. Which of the following shows how the year end adjusting entry for warranty expense would affect the company's financial statements?
Multiple Choice
Balance Sheet Stockholders Liabilities Equity (10,000) (10,000)
Income Statement
St
Assets NA
Revenue NA
Expenses 10,000
Net Income (10,000)
Balance Sheet Stockholders' Liabilities Equity 10,000 (10,000)
Income Statement
St
Assets NA
Revenue NA
Expenses 10,000
Net Income (10,000)
Balance Sheet Stockholders' Liabilities Equity NA (10,000)
Income Statement
St
Assets (10,000)
Revenue NA
Expenses 10,000
Net Income (10,000)
Balance Sheet Stockholders Liabilities Equity 10,000 (10,000)
Income Statement
St
Assets NA
Revenue NA
Expenses 10,000
Net Income (10,000)