Horngren's Financial & Managerial Accounting Plus Mylab Accounting With Pearson Etext -- Access Card Package (5th Edition) (miller-nobles Et Al., The Horngren Accounting Series)
5th Edition
ISBN: 9780134077345
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 11, Problem 11.28AP
Journalizing liability transactions
The following transactions of Oscar Landing occurred during 2016:
| Apr. 30 | Landing is party to a patent infringement lawsuit of $220,000. Landing's attorney is certain it is remote that Landing will lose this lawsuit. |
| Jun. 30 | Estimated warranty expense at 2% of sales of $420,000. |
| Jul. 28 | Warranty claims paid in the amount of $5,800. |
| Sep. 30 | Landing is party to a lawsuit for copyright violation of $110,000. Landing's attorney advises that it is probable Landing will lose this lawsuit. The attorney estimates the loss at $110,000. |
| Dec. 31 | Landing estimated warranty expense on sales for the second half of the year of $460,000 at 2%. |
Requirements
1. Journalize required transactions, if any, in Landing's general journal. Explanations are not required.
2. What is the balance in Estimated Warranty Payable assuming a beginning balance of $0?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
41
Reported in the ledger of Mayumi Company On December 31, 2017, is a Patent account with a balance of P120,000, and accumulated amortization of P 60,000. The Patent is being amortized for its useful life of eight years. On July 1, 2018, Mayumi spent P 30,000 to defend the patent against an infringement suit. On January 1, 2019, with the rapid change in technology, the company determined that the patent will be of no value to the company and that a loss on patent obsolescence has to be recognized.How much is the loss on patent obsolescence?
1. For each of the following situations, which is NOT reported as a
liability on the balance sheet of Bloomington Inc. at December 31,
2016.
A) Bloomington owes $240,000 at year-end 2016 for inventory
purchase.
B) Bloomington agreed to purchase a $30,000 drill press in January
2017 (has not purchased yet).
C) During November and December of 2016, Bloomington sold
products to a customer and warranted them against product failure
for 90 days. Estimated costs of honoring this 90-day warranty during
2017 are $5,100.
D) Bloomington provides a profit-sharing bonus for its executive equal
to 5% of reported pretax annual income. The estimated pretax
income for 2016 is $900,000. Bonuses are not paid until January of
the following year.
Your answer is
Explain your answer:
2. A stockholder has filed a lawsuit against Fischer Corporation.
Fischer's attorneys have reviewed the facts of the case. Their review
revealed that similar lawsuits have never resulted in a cash award
and it is highly…
#22During 2018, Josephine company was sued by a competitor for P1,500,000 for infringement of a patent. Based on the adviceof the entity’s legal counsel, Josephine company accrued the sum of P900,000 as a provision in its financial statements for theyear ended December 31, 2018. Subsequently, on March 15, 2019, the supreme court decided in favor of the party alleginginfringement of the patent and ordered the defendant to pay the aggrieved party a sum of P1,050,000. The financial statementswere prepared by the entity’s management on February 15, 2019 and approved by the board of directors on March 31, 2019.How much should be recognized as accrued liability on December 31, 2018?
PLS provide solution and explanation for the answer above
Philippines Accounting standard
Chapter 11 Solutions
Horngren's Financial & Managerial Accounting Plus Mylab Accounting With Pearson Etext -- Access Card Package (5th Edition) (miller-nobles Et Al., The Horngren Accounting Series)
Ch. 11 - Prob. 1QCCh. 11 - On January 1, 2016, a business borrowed 18,000 on...Ch. 11 - A company sells 180,000 (selling price) of goods...Ch. 11 - Prob. 4QCCh. 11 - Prob. 5QCCh. 11 - Prob. 6QCCh. 11 - Prob. 7QCCh. 11 - Vega Company expects to pay a 4% bonus on net...Ch. 11 - Prob. 9QCCh. 11 - Prob. 10QC
Ch. 11 - Prob. 1RQCh. 11 - What is a current liability? Provide some examples...Ch. 11 - How is sales tax recorded? Is it considered an...Ch. 11 - How do unearned revenues arise?Ch. 11 - What do short-term notes payable represent?Ch. 11 - Coltrane Company has a 5,000 note payable that is...Ch. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQCh. 11 - Prob. 10RQCh. 11 - What are the two main controls for payroll?...Ch. 11 - When do businesses record warranty expense, and...Ch. 11 - Prob. 13RQCh. 11 - Prob. 14RQCh. 11 - Prob. 15RQCh. 11 - Determining current versus long-term liabilities...Ch. 11 - Prob. 11.2SECh. 11 - Prob. 11.3SECh. 11 - Accounting for a note payable On December 31,...Ch. 11 - Prob. 11.5SECh. 11 - Prob. 11.6SECh. 11 - Computing payroll amounts considering FICA tax...Ch. 11 - Prob. 11.8SECh. 11 - Prob. 11.9SECh. 11 - Prob. 11.10SECh. 11 - Prob. 11.11SECh. 11 - Accounting treatment for contingencies Fernandez...Ch. 11 - Prob. 11.13SECh. 11 - Recording sales tax Consider the following...Ch. 11 - Prob. 11.15ECh. 11 - Recording and reporting current liabilities...Ch. 11 - Journalizing current liabilities Erik OHern...Ch. 11 - Prob. 11.18ECh. 11 - Recording employer payroll taxes and employee...Ch. 11 - Prob. 11.20ECh. 11 - Prob. 11.21ECh. 11 - Prob. 11.22ECh. 11 - Prob. 11.23ECh. 11 - Prob. 11.24ECh. 11 - Prob. 11.25APCh. 11 - Prob. 11.26APCh. 11 - Journalizing liability transactions T he following...Ch. 11 - Journalizing liability transactions The following...Ch. 11 - Prob. 11.29APCh. 11 - Prob. 11.30BPCh. 11 - Prob. 11.31BPCh. 11 - Prob. 11.32BPCh. 11 - Prob. 11.33BPCh. 11 - Prob. 11.34BPCh. 11 - Prob. 11.35CPCh. 11 - Prob. 11.1CTDCCh. 11 - Sell-Soft is the defendant in numerous lawsuits...Ch. 11 - Prob. 11.1CTEICh. 11 - Derails about a company's liabilities appear in a...Ch. 11 - Prob. 11.1CTCA
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Following is the unadjusted trial balance for Pens Unlimited on December 31, 2017. You are also given the following supplemental information: A pending lawsuit, claiming $4,200 in damages, is considered likely to favor the plaintiff and can be reasonably estimated. Pens Unlimited believes a customer may win a lawsuit for $5,000 in damages, but the outcome is only reasonably possible to occur. Pens Unlimited records warranty estimates on the basis of 2% of annual sales revenue. A. Using the unadjusted trial balance and supplemental information for Pens Unlimited, construct an income statement for the year ended December 31, 2017. Pay particular attention to expenses resulting from contingencies. B. Construct a balance sheet, for December 31, 2017, from the given unadjusted trial balance, supplemental information, and income statement for Pens Unlimited. Pay particular attention to contingent liabilities. C. Prepare any necessary contingent liability note disclosures for Pens Unlimited. Only give one to three sentences for each contingency note disclosure.arrow_forwardOn July 1, 2014, Mark Company acquired machinery worth P 2,500,000 from Julian Corporation. Terms of the contract calls for a down-payment of P 500,000 and signing a 2-year 10% note payable for the balance. Interest is payable quarterly. The existing loan agreement does not carry a provision to refinance. During September, Mark was experiencing financial difficulty and was unable to pay the periodic interest. What total amount of current liability should Mark Company report in its December 31, 2014 statement of financial position assuming Julian Company agreed after the balance sheet date but before the financial statements authorized to issue not to demand payment as a consequence of the breach? а. None b. P 2,000,000 P 100,000 d. P 2, 100,000 с.arrow_forwardSuits for damages totaling P8,000,000 are pending against Freddy. The company lawyers advised that losses on such suits are not probable. However, company policy has mandated authorization that provision be made in the accounts for any possible loss up to P5,000,000. The suit was settled in 2021 and payment of P7,000,000 was made. Required: Prepare the entry to record the contingent liabilityarrow_forward
- On Feb, 5, 2017, an employee filed a P 2,000,000 lawsuit against Sans Co. for damages suffered when one of Sans' plant exploded on Dec, 29, 2016. The legal counsel believed the entity would probably lose the lawsuit and estimated the loss to be P 500,000. The employee offered to settle the lawsuit out of court for P 900,000 but the entity dis not agree to the settlement. On December 31, 2016, what amount should be reported as liability from lawsuit?arrow_forwardFor each of the following situations, indicate the liability amount, if any, which is reported on the balance sheet of Hirst Inc. at December 31, 2015.a. Hirst owes $110,000 at year end 2015 for its inventory purchases.b. Hirst agrees to purchase a $28,000 drill press in January 2016.c. During November & December 2015, Hirst sold products to a firm with a 90 day warranty against product failure. Estimate 2016 costs of honoring the warranty are $2,200. d. Hirst provided a profit-sharing bonus for its executives equal to 5% of its reported pre-tax annual income. The estimated pretax income for 2015-is $500,00. Bonuses are not paid until January of the following year.arrow_forwardThe following information is related to Sunglow Solar Ltd: • Sales for the year ended 30 June 2019 was $1,200,000 • Provision for warranties before adjustment was $36,000 At 30 June 2019, Sunglow Solar Ltd. adjusted its Provision for Warranties so that it would be equal to 4% of sales for the year ended on that date. On 16 September 2019, a successful claim for warranty on faulty goods to the cost of $700 was made on Sunglow Solar Ltd. Required: a) Prepare the general journal entry at 30 June 2019 to adjust the Provision for Warranties to the required level. b) Record the payment of the warranty claim on 16 September 2019 in general journal format.arrow_forward
- On January 2, 2016, David Corporation purchased a patent for $500,000. The remaining legal life is 12 years, but the company estimated that the patent will be useful only for eight years. In January 2018, the company incurred legal fees of $45,000 in successfully defending a patent infringement suit. The successful defense did not change the company’s estimate of useful life. Required: Prepare journal entries related to the patent for 2016, 2017, and 2018.arrow_forwardGINGERBREAD Company is involved in a litigation regarding a faulty product sold in a prior year. The entity has consulted with lawyer and determined that there is a 50% chance of losing. The lawyer estimated that the amount of any payment would be between ₱500,000 to ₱800,000 with ₱500,000 as the best estimate. What is the required journal entry as a result of this litigation? * a. No journal entry is required b. Debit Litigation expense and credit Litigation liability for ₱ 500,000 c. Debit Litigation expense and credit Litigation liability for ₱ 250,000 d. Debit Litigation expense and credit Litigation liability for ₱ 650,000arrow_forwardOn January 1, 2015, Moose Co. purchased for $360,000 a patent that had been granted two years earlier. On January 1, 2017, legal costs of $64,000 were incurred in a successful defense of the patent. Assuming the maximum period allowable is used for patent amortization, what is Moose's patent amortization expense for 2017? $21,555 $20,000 $18,000 $24,000arrow_forward
- On January 1, 2016, Byner Company purchased a used tractor. Byner paid $5,000 down and signed a noninterestbearing note requiring $25,000 to be paid on December 31, 2018. The fair value of the tractor is not determinable. An interest rate of 10% properly reflects the time value of money for this type of loan agreement. The company’s fiscal year-end is December 31. Required: 1. Prepare the journal entry to record the acquisition of the tractor. Round computations to the nearest dollar. 2. How much interest expense will the company include in its 2016 and 2017 income statements for this note? 3. What is the amount of the liability the company will report in its 2016 and 2017 balance sheets for this note?arrow_forwardFlounder Corporation purchases a patent from Shamrock Inc. on July 1, 2017, for $260,000. The patent has a remaining legal life of 9 years. Flounder estimates the patent will have a useful life of 4 years, based on expected product innovations in the market. Prepare Flounder's journal entries to record the purchase of the patent and 2017 amortization. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit (To record purchase of patents) (To record amortization of patents)arrow_forwardNgata Ltd. insured under a loss of profits policy of Sh.16,000,000. The company’s premises were partly destroyed by fire which took place on 1 May 2018 and the business resumed normal operations on 1 September 2018. Given below is the information extracted from the books of the company relating to the policy: Period of indemnity is six months. Net profit for preceding financial year – Sh.8,800,000. Insured standing charges – Sh.9,600,000. Uninsured standing charges – Sh.1,400,000 Increased cost of working – Sh.5,000,000. Savings in insured standing charges – Sh.800,000. Reduction in turnover avoided through increase in cost of working – Sh.10,000,000 Financial year ends on 31st December. The following are turnovers for four months ended 30 April, 31 August and 31 December respectively. Year Sh. Sh. Sh. Jan-April May- Aug Sept- Dec 2017 2018 22,000,000 24,000,000 50,000,000 25,000,000 48,000,000 31,000,000 10. Owing to reasons acceptable to…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Revenue recognition explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=816Q6pOaGv4;License: Standard Youtube License