Cr. Wages Payable (or Accrued Payroll) 102,000SOLUTIONS:SOLUTIONS: M7.1.a.b.a.b. Balance Sheet Income Statement .Assets = Liabilities + Stockholders’ Equity  Net income = Revenues - ExpensesDecember 1, 2019:Cash Unearned +25,800 Rent Revenue +25,800Each month-end: Unearned Rent Rent Revenue Revenue -8,600 +8,600December 1, 2019 1. Dr. Cash. .........................................................................……… 25,800 Cr. Unearned Rent Revenue ....................................……… 25,800To record the receipt a three-month advance rent payment. Each month-end: 2. Dr. Unearned Rent Revenue...........................................……... 8,600 Cr. Rent Revenue................................................................. 8,600To record a reduction in the liability account for rent earned each month.M7.2. Balance Sheet Income Statement .Assets = Liabilities + Stockholders’ Equity  Net income = Revenues - Expenses Wages Payable Wages +102,000 Expense Withholding Liabilities (accounts as shown in the entry) -143,000 +10,000 +25,000 +6,000Dr. Wages Expense .................................................………............ 143,000 Cr. Wages Payable (or Accrued Payroll).................................. 102,000 Cr. FICA Taxes Withheld......................................................... 10,000 Cr. Income Taxes Withheld...................................................... 25,000 Cr. Medical Insurance Contributions........................................ 6,000 To record accrued payroll.M7.3.a.b.Warranty Expense = ($6,500,000 sales * 1.5% estimated warranty expense) = $97,500 Estimated Warranty Liability, 1/1/19 balance...................................……... $25,000Less: Actual warranty costs during 2019....................................................... ( ? )Add: Warranty Expense accrued during 2019...................................……... 97,500Estimated Warranty Liability, 12/31/19 balance........................................... $34,400 Solving for the missing amount, the actual costs of servicing products under warranty during the year = $25,000 + 97,500 - $34,400 = $88,100M7.4.a. Annual interest payment = $60 million * 7% = $4,200,000b. The bonds were issued at a discount because market interest rates were more than the stated rate when the bonds were issued. The higher the discount rate (i.e., the market interest rate), the lower the present value of cash flows for interest payments and principal (i.e., the lower the bond’s selling price).c. Interest expense will be more than the interest paid because the amortization of bond discount will increase interest expense. M8.1. a. Balance Sheet Income Statement . Assets = Liabilities + Stockholders’ Equity  Net income = Revenues - Expenses January 1, 2019 to record stock issuance: Cash Common Stock + 1,680,000 + 140,000 Additional Paid-In Capital + 1,540,000b. December 31, 2019 to record the declaration of dividends: Dividends Retained Payable Earnings + 280,000 - 280,000 c. February 7, 2020 to record the payment of dividends: Cash Dividends - 280,000 Payable - 280,000 a. January 1, 2019:Dr. Cash (140,000 shares @ $12).......................................................... 1,680,000 Cr. Common Stock (140,000 shares @ $1 per share)...................... 140,000 Cr. Additional Paid-In Capital (140,000 @ $11). .............. 1,540,000To record stock issuance.b. December 31, 2019:Dr. Retained Earnings........................................................................... 280,000 Cr. Dividends Payable................................................................................... 280,000To record the declaration of dividends.c. February 7, 2020:Dr. Dividends Payable.......................................................................... 280,000 Cr. Cash........................................................................................................ 280,000To record the payment of dividends.M8.2. Preferred dividends for 2018, 2019, and 2020 would have to be paid before a dividend on the common stock could be paid. Annual dividend = 6.5% x $100 per share x 275,000 shares = $1,787,500 Dividends for 3 years = 3 x $1,787,500 = $5,362,500M8.3. a. A 4-for-1 split means that for every share now owned, the stockholder will own 4 shares. Thus, I will own 3,600 shares x 4 = 14,400 shares.b. Because there are now 4 times as many shares of stock outstanding, and the financial condition of the company hasn't changed, the market price per share should be one-fourth (1/4) of what it was, or $68 / 4 = $17 per share. The total market value of my investment will not have