Dwane Johnson owes Verizon Wireless $1100. Johnson offers Verizon $500 in lieu of the original $1000 debt and Verizon accepts. Settling a claim by the debtor offering to pay less than the creditor claims to be owed is an example of A. Fraudulent Misrepresentation B. an accord and satisfaction. C.promissory estoppel. D. a release. Give correct answer with proper explanations

Dwane Johnson owes Verizon Wireless $1100. Johnson offers Verizon $500 in lieu of the original $1000 debt and Verizon accepts. Settling a claim by the debtor offering to pay less than the creditor claims to be owed is an example of A. Fraudulent Misrepresentation B. an accord and satisfaction. C.promissory estoppel. D. a release. Give correct answer with proper explanations

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 6TP: When a customer is delinquent on paying a notes receivable, your company has the option to continue...

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For each separate situation, indicate whether Cruz Company should (a) record a liability, (b) disclose in notes, or (c) have no disclosure. 1. Cruz Company guarantees the $100,000 debt of a supplier. It is not probable that the supplier will default on the debt. 2. A disgruntled employee is suing Cruz Company. Legal advisers believe that the company will likely need to pay damages, but the amount cannot be reasonably estimated.
Swell Company has a lawsuit pending from a customer claiming damages of $100,000. Swell’s attorney advises that the likelihood the customer will win is remote. GAAP requires at a minimum that this contingent liability be a. disclosed in the footnotes. b. disclosed in the footnotes, with ranges of potential loss. c. recorded as a journal entry, as well as disclosed in the footnotes. d. No disclosure is required.
Swell Company has a lawsuit pending from a customer claiming damages of $100,000. Swell’s attorney advises that the likelihood the customer will win is remote. GAAP requires at a minimum that this contingent liability be disclosed in the footnotes. disclosed in the footnotes, with ranges of the potential loss. recorded as a journal entry, as well as disclosed in the footnotes. No disclosure is required.
Axel Brick Company has a lawsuit pending from a customer claiming $100,000 in damages. Axel's attorney advises the likelihood the customer will win the lawsuit is reasonably probable. GAAP requires at a minimum that this contingent liability be... A. Disclosed in a note to the financial statements B. Record as a liability on the balance sheet C. Record as an expense on the income statement
Before any debt cancellation, the insolvent KuhnCo holds business equipment, its only asset, with a fair market value of $1 million and related liabilities of $1.25 million. The lender agrees to cancel $400,000 of the liabilities. KuhnCo has no other liabilities. a. How much gross income does KuhnCo report as a result of the debt cancellation? b. How would your answer change, if at all, had the lender cancelled $200,000 of the debt?
M issues a negotiable BOE payable to P or order for P10,000. P endorsed the instrument to A, then A to B, then B to C, then C to D. D presents the instrument to the drawee, but the drawee dishonored the instrument. Assuming that D approached C and invoked his warranty as an indorser, from whom can C seek recovery of amount paid to D? a. B, then A, then P, then M. b. M, P, A, B without any particular order c. M d. B
We discussed contingent liabilities in class. Describe the conditions for when a contingent liability must be recorded through a journal entry, when it should be disclosed in the footnotes and when neither a journal entry nor disclosure is required? Assume that Mojito Corporation is sued by Dulcinea, Inc. for $1,000,000. Mojito’s attorneys believe that it is probable that the company will lose the suit and have to pay between $300,000 and $400,000 to Dulcinea. Based on your answer to a, what should Mojito do?
Wilhelm Company prepares its financial statements according to International Accounting Standards (IFRS). It recently estimated that it has a 55 percent chance of losing a lawsuit. Assuming Wilhelm can reliably estimate the amount it would pay if it loses the lawsuit, it should. a. Accrue a liability for the lawsuit. b. Disclose the matter in the notes to the financial statements but not accrue a liability for the lawsuit. c. Make no mention of the lawsuit in the financial statements or notes. d. None of the above.
Mathew Corporation's had a specific receivable from a customer in the amount of P 600,000 as of December 31, 2020. During 2021, the customer informed Mathew Corporation that servicing of its payable will be made once there is significant improvement in their financial capabilities. Since there are no available historical data relating to similar borrowers, Mathew Corporation uses its experienced judgment to estimate the amount of impairment loss. Reasonable estimate revealed that the fair value of the receivable as of December 31, 2021 represents 40% of the outstanding receivable. QUESTION:What amount of impairment loss on its receivable should Mathew report for 2021?
Choose the correct. Prior to filing a voluntary Chapter 7 bankruptcy petition, Haynes Company pays a supplier $13,000 to satisfy an unsecured claim. Haynes wasinsolvent at the time. Subsequently, the trustee appointed to oversee this liquidation forces the return of the $13,000 by the supplier. Which of the following is true?a. A preference transfer has been voided.b. All transactions just prior to a voluntary bankruptcy proceeding must be nullified.c. The supplier should sue for the return of this money.d. The $13,000 claim becomes a liability with priority.
Listed below are a few transactions and events of Melbourn Company. Melbourn Company guarantees the $100,000 debt of a supplier. It is not probable that the supplier will default on the debt. A disgruntled employee is suing Melbourn Company. Legal advisers believe that the company will probably need to pay damages, but the amount cannot be reasonably estimated. Indicate the proper financial reporting for each case.
PONTEJO FINANCE CORPORATION purchases the accounts receivable of other companies on a without recourse, notification basis. At the time the receivables are factored, 15% of the amount factored is charged to the client as commission and recognized as revenue in PONTEJO’S books. Also, 10% of the receivables factored is withheld by PONTEJO as protection against sales returns or other adjustments. This amount credited by PONTEJO to the client Retainer account. At the end of each month, payments are made by PONTEJO to its clients so that the balance in the Client Retainer account is equal to 10% of unpaid factored receivables. Based on PONTEJO’S bad debt loss experience, an allowance for bad debts of 5% of all factored receivables is to be established, PONTEJO makes adjusting entries at the end of each month. On January 3, 2023, PEPITO Company factored its accounts receivable totaling P1,000,000. By January 31, P800,000 on these receivables had been collected by…