Wk 2 DQ 1

Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2024 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable, estimated to cost the company $2.6 million. The fiscal year ends on December 31. Required:1. Should this contingent liability be reported, disclosed in a note only, or neither?2. What loss, if any, should Top Sound report in its 2024 income statement?3. What liability, if any, should Top Sound report in its 2024 balance sheet?4. What entry, if any, should be recorded? 1. Should this contingent liability be reported, disclosed in a note only, or neither? This contingent liability should be ?????? 2. What loss, if any, should Top Sound report in its 2024 income statement? (Enter your answer in dollars, not in millions (i.e. 5.5 million should be entered as 5,500,000).)   loss to be reported ????????   3. What…

Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2024 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable, estimated to cost the company $2.2 million. The fiscal year ends on December 31. Required: 1. Should this contingent liability be reported, disclosed in a note only, or neither? 2. What loss, if any, should Top Sound report in its 2024 income statement? 3. What liability, if any, should Top Sound report in its 2024 balance sheet? 4. What entry, if any, should be recorded? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Should this contingent liability be reported, disclosed in a note only, or neither? This contingent liability should be

Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2024 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable, estimated to cost the company $3.2 million. The fiscal year ends on December 31. Required: 1. Should this contingent liability be reported, disclosed in a note only, or neither?2. What loss, if any, should Top Sound report in its 2024 income statement?3. What liability, if any, should Top Sound report in its 2024 balance sheet?4. What entry, if any, should be recorded?

Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December 2024 of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually certain, estimated to cost the company $2 million. The fiscal year ends on December 31. Required: Should this loss contingency be accrued, only disclosed, or neither? What loss, if any, should Sound Audio report in its 2024 income statement? What liability, if any, should Sound Audio report in its 2024 balance sheet? Prepare any journal entry needed.

Businesswire.com reported a shortage of inventory for new and used cars during the pandemic mainly due to mass transit riders choosing to purchase a vehicle for safer transportation coupled with the ease of the transformed digital buying process along with supply chain disruptions. New vehicle sales doubled during the pandemic pushing the average price of both new and used vehicles up to an estimated $39,500 in 2021. If a new car loses 20% of its value the first year and 15% annually until year 10 when it is worth 10% of its original cost, what will the estimated value of your $45,680 business vehicle be in year 4? If using the declining-balance method, what is the depreciation expense for year 4 with an estimated life of 5 years and residual value of $19,000?

Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December 2024 of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually certain, estimated to cost the company $2 million. The fiscal year ends on December 31. Required: 1. Should this loss contingency be accrued, only disclosed, or neither? 2. What loss, if any, should Sound Audio report in its 2024 income statement? 3. What liability, if any, should Sound Audio report in its 2024 balance sheet? 4. Prepare any journal entry needed. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 Prepare any journal entry needed. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (i.e., 10,000,000 should be entered as 10). 1 No Event 1 General…

Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2021 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable estimated to cost the company $4 million. The fiscal year ends on December 31.Required:1. Should this contingent liability be reported, disclosed in a note only, or neither? Explain.2. What loss, if any, should Top Sound report in its 2021 income statement?3. What liability, if any, should Top Sound report in its 2021 balance sheet?4. What entry, if any, should be recorded?

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Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December 2021 of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually certain, estimated to cost the company $8.0 million. The fiscal year ends on December 31.   Required: Should this loss contingency be accrued, only disclosed, or neither? What loss, if any, should Sound Audio report in its 2021 income statement? What liability, if any, should Sound Audio report in its 2021 balance sheet?   1   Loss contingency _______________________ 2   Loss                       _________   million 3  Liability                  _________   million   Prepare any journal entry needed.   Journal entry worksheet     Record the liability on product recall.   Transaction                            General Journal                           Debit                       Credit        1…

Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2024 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable, estimated to cost the company $3.3 million. The fiscal year ends of December 31. Required: 1 Should this contingent liability be reported, disclosed in a note only, or neither? 2 What loss, if any, should Top Sount report in its 2024 income statement? 3 What liability, if any should Top Sount report in its 2024 income statement? 4 What entry, if any, should be recorded?

1. In November of the current year, an automobile manufacturing company recalled all pickup trucks manufactured during the past two years. A flaw in the battery cable was discovered and the recall provides for replacement of the defective cables. The estimated cost of this recall is $3.7 million. 2. The EPA has notified a company of violations of environmental laws relating to hazardous waste. These actions seek cleanup costs penalties, and damages to property. The company is reasonably certain there will be cost associated with the cleanup, but cannot estimate the amount. The cleanup cost could be as high as $4,170,000 or as little as $670,000 and insurance could reimburse all o part of the cost. There is no way to more accurately estimate the cost to the company at this time. 3. Holland Company does not carry property damage insurance because of the cost. The company has suffered substantial losses each of the past three years. However, it has had no losses for the current year.…

Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December 2021 of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually certain, estimated to cost the company $10.5 million. The fiscal year ends on December 31.Required:1. Should this loss contingency be accrued, only disclosed, or neither?2. What loss, if any, should Sound Audio report in its 2021 income statement?3. What liability, if any, should Sound Audio report in its 2021 balance sheet?4. Prepare any journal entry needed.

A local company located in Nizwa assembles engines for customized trekking sport utility vehice SUV. During the year end 2019 financial review, the company is concerned with its bloated inventory cost for the past five years. The profitability of the company has been declining year on year due to the effect of the increasing inventory costs. The newly hired manager who is a mechanical engineer is tasked to look into this matter and will provide a comprehensive proposal report to the company CEO to reduce the bloating inventory cost. The current consumption or usage of parts of the assembly department is shown in Table Q1. This data shows the typical annual usage or consumption of component parts for its engines. He found out that there is big mismanagement or neglect of the company inventories. Currently, the company is ordering parts from its suppliers locally and abroad once every three months. (1) Develop an ABC analysis for the company's inventories. Show completely the results in…

The following items pertain to possible provisions: a. A company uses a part manufactured in Germany in its automobile manufacturing plant. There has been a concern about the failure of this part in cars manufactured in Germany. No failures have occurred to date in Canada. The company decided to do a voluntary recall of all cars manufactured with this part. The recall is 40% complete and has cost $1,250,000 to date. b. A company self-insures for floods. That is, it pays no insurance but is liable to replace assets lost through flood damage. No losses have been incurred this year, but there have been $225,000 of losses in most other years, and the company is concerned that there might well be $450,000 of losses next year, evening out the pattern. c. A company offers a three-year guarantee over parts and labour for products sold to ensure that parts work as expected. There were no payments this year, and only 5% of products sold this year are expected to need repairs in the next year.…

Mama Mo Na Tita Ko Corporation, a manufacturer of cleaning products, is preparing annual financial statements at December 31, 2022. Because of a recently proven health hazard in one of its cleaning products, the government has clearly indicated its intention of having the company recall all cans of this paint sold in the last three months. The management estimates that this recall would cost P800,000. What accounting recognition, if any, should be accorded this situation? Statement 1: Recognize expense of P800,000 and liability of P5,800,000. Statement 2: Disclosed P800,000 as contingent liability in the notes to financial statement. Both statements are correct Both statements are incorrect Only statement 2 is correct Only statement 1 is correct

Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December 2021 of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually certain, estimated to cost the company $2 million. The fiscal year ends on December 31.Required:1. Should this loss contingency be accrued, only disclosed, or neither? Explain.2. What loss, if any, should Sound Audio report in its 2021 income statement?3. What liability, if any, should Sound Audio report in its 2021 balance sheet?4. Prepare any journal entry needed.

Ciclista Inc., a bicycle manufacturer, is preparing its financial statements for December 31, 2020. The company has identified the following legal situations that can be classified as contingencies. 1. The company has discovered that a type of bicycle that they began to manufacture and sell in 2020 has some defects in the handlebars. The company has sent a statement to newspapers and magazines offering to replace the handlebars. The company estimates a cost of $ 400,000 for these repairs (This is recorded as a separate entry from Expense). No legal charges have been filed for damages caused by the defect. The company considers that there are 2. The company maintains an incinerator in the back of a warehouse that is used to burn cardboard boxes received in inventory shipments. In September 2020, the state environmental protection agency filed a lawsuit against the company for contamination. The company hopes to stop using the incinerator and start recycling. However, his lawyers…

ABC Corporation a manufacturer of cleaning products is preparing annual financial statements at December 31, 2020. Because of a recently proven health hazard in one of its cleaning products, the PH government has clearly indicated its intention of having ABC recall all can of this paint sold in the last three months. The management of ABC estimates that this recall would cost P5,800,000.   What accounting recognition, if any, should be accorded this situation?

Please read and answer questions carefully, Last question is asking for journal entry.

Dowell Fishing Supply, Inc., sold $47,000 of Dowell Rods on December 15, 2018, to Bassadrome. Because of a shipping backlog, Dowell held the inventory in Dowell's warehouse until January 12, 2019 (having assured Bassadrome that it would deliver sooner necessary). How much revenue should Dowell recognize in 2018 for the sale to Bassadrome? Revenue

Grapes Company provided the following selected transactions related to contingencies. The fiscal year ends on December 31, 2023. Financial statements were issued on April 1, 2024.   a. In December 2023, Grapes became aware of an engineering flaw in a product that poses a potential risk of injury. As a result, a product recall appears inevitable. This move would likely cost the entity P2,800,000.   b. In November 2023, the City of Manila filed suit against the entity. Grapes government is asking civil penalties and injunctive relief for violations of clean water laws. Grapes reached a settlement with the city Government to pay P3,200,000 in penalties on February 15, 2024.   c. Grapes is the plaintiff in a P4,000,000 lawsuit filed against a customer for costs and lost profit from contract rejected in 2023. The attorney advised that it is probable that Grapes will be awarded P3,000,000. On March 20, 2024, Grapes won the case and received P3,500,000.   What amount should be reported as…

! Required information [The following information applies to the questions displayed below.] A company designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December Year 1 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable, estimated to cost the company $3.1 million. The fiscal year ends on December 31. 3. What liability, if any, should the company report in its Year 1 balance sheet? (Enter your answer in dollars, not in millions (i.e. 5.5 should be entered as 5,500,000).) Liability to be reported

40. Grapes Company provided the following selected transactions related to contingencies. The fiscal year ends on December 31, 2023. Financial statements were issued on April 1, 2024.     In December 2023, Grapes became aware of an engineering flaw in a product that poses a potential risk of injury. As a result, a product recall appears inevitable. This move would likely cost the entity P2,800,000.    In November 2023, the City of Manila filed suit against the entity. Grapes government is asking civil penalties and injunctive relief for violations of clean water laws. Grapes reached a settlement with the city Government to pay P3,200,000 in penalties on February 15, 2024.    Grapes is the plaintiff in a P4,000,000 lawsuit filed against a customer for costs and lost profit from contract rejected in 2023. The attorney advised that it is probable that Grapes will be awarded P3,000,000. On March 20, 2024, Grapes won the case and received P3,500,000.    What amount should be reported…

Dowell Fishing Supply, Inc., sold $50,000 of Dowell Rods on December 15, 2021, to Bassadrome. Because of a shipping backlog, Dowell held the inventory in Dowell’s warehouse until January 12, 2022 (having assured Bassadrome that it would deliver sooner if necessary). How much revenue should Dowell recognize in 2021 for the sale to Bassadrome?

Acme Corp. is being sued for $20,000,000 due to their continued provision of malfunctioning, dangerous products. One customer in particular grew frustrated with these failings and initiated the lawsuit. Acme Corp's sales are about $50 million per year. On December 31st, 2020, their lawyer states: "It's likely that we will win this case, and the lawsuit will probably be dropped shortly." On December 31st, 2021, their lawyer states: "We got unlucky with the judge that was chosen for the case, and only have a 50% chance of winning. I think we should probably settle. They should be happy to settle for $2,000,000." On December 31st, 2022, their lawyer states: "They didn't accept our settlement offer and we're gonna lose." Instructions 1) In accounting, what do we call this type of situation? 2) Detail the impact to the financial statements on December 31, 2020 and explain your rationale. 3) Detail the impact to the financial statements on December 31, 2021 and explain your rationale. 4)…

SafeLife Incorporated has been producing candles with an added ingredient that was advertised to rid the surrounding air of any COVID-19 virus particles. Due to several viral social media posts challenging the effectiveness of their claim, the company is no longer producing the candles. Safelife is considering using their existing inventory of wax for a special project, which would require all 160 containers of the wax that are in stock. In total, these containers originally cost the company $2,336. If SafeLife purchased containers of this wax on the open market, they would have to pay $8 per container. However, SafeLife has no other use for the containers of wax. If they do not proceed with the special project, SafeLife would sell the containers at the discounted price of $715 per container, plus they would have to pay delivery costs to the purchaser totaling $87 for all 160 containers. As SafeLife is considering the special project, what is the relevant cost of the 160 containers of…

Diamond Computers, which is owned and operated by Dale Diamond, manufactures and sells different types of computers. The company has reported profits every year since its inception in 2002 and has applied for a bank loan near the end of 2021 to upgrade manufacturing facilities. These upgrades should significantly boost future productivity and profitability. In preparing the financial statements for the year, the chief accountant, Sandy Walters, mentions to Dale that approximately $80,000 of computer inventory has become obsolete and a write-down of inventory should be recorded in 2021. Dale understands that the write-down would result in a net loss being reported for company operations in 2021. This could jeopardize the company’s application for the bank loan, which would lead to employee layoffs. Dale is a very kind, older gentleman who cares little for his personal wealth but who is deeply devoted to his employees’ well-being. He truly believes the loan is necessary for the company’s…

In 1998 a council-owned factory began selling replacement windows to outside customers for the first time. At the time the factory was making losses and the council needed to make severe budget cuts. The new customers have helped to reduce the losses in 1999 and a return to profits is required in 2000.An order for a special type of window has been received. The factory manufactures this type of window very occasionally and there is some partially completed inventory from last year. The inventory relates to an order from the council that was cancelled to save costs. The special windows are typically 30% complete and some of the material can be used for the new order. The accountant still has detailed records of the work done last year.The accountant has provided the following information for the factory managers.Costs incurred last year on special windows now held in inventoryPVC material = £5,000Labour = £3,000(i) The factory was planning to sell the inventory of special windows to a…

In 1998 a council-owned factory began selling replacement windows to outside customers for the first time. At the time the factory was making losses and the council needed to make severe budget cuts. The new customers have helped to reduce the losses in 1999 and a return to profits is required in 2000.An order for a special type of window has been received. The factory manufactures this type of window very occasionally and there is some partially completed inventory from last year. The inventory relates to an order from the council that was cancelled to save costs. The special windows are typically 30% complete and some of the material can be used for the new order. The accountant still has detailed records of the work done last year.The accountant has provided the following information for the factory managers.Costs incurred last year on special windows now held in inventoryPVC material = £5,000Labour = £3,000(i) The factory was planning to sell the inventory of special windows to a…