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Following is the unadjusted trial balance for Sun Energy Co. on December 31, 2017. You are also given the following supplemental information: A pending lawsuit, claiming $2,700 in damages, is considered likely to favor the plaintiff and can be reasonably estimated. Sun Energy Co. believes a customer may win a lawsuit for $3,500 in damages, but the outcome is only reasonably possible to occur. Sun Energy calculated warranty expense estimates of $210. A. Using the unadjusted trial balance and supplemental information for Sun Energy Co., 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 Sun Energy Co., paying particular attention to contingent liabilities. C. Prepare any necessary contingent liability note disclosures for Sun Energy Co. Only give one to three sentences for each contingency note disclosure.

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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Chapter
Section
FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 12, Problem 9EA
Textbook Problem
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Following is the unadjusted trial balance for Sun Energy Co. on December 31, 2017.

Chapter 12, Problem 9EA, Following is the unadjusted trial balance for Sun Energy Co. on December 31, 2017. You are also

You are also given the following supplemental information: A pending lawsuit, claiming $2,700 in damages, is considered likely to favor the plaintiff and can be reasonably estimated. Sun Energy Co. believes a customer may win a lawsuit for $3,500 in damages, but the outcome is only reasonably possible to occur. Sun Energy calculated warranty expense estimates of $210.

A. Using the unadjusted trial balance and supplemental information for Sun Energy Co., 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 Sun Energy Co., paying particular attention to contingent liabilities.

C. Prepare any necessary contingent liability note disclosures for Sun Energy Co. Only give one to three sentences for each contingency note disclosure.

To determine

(a)

Introduction:

Financial statements are the financial performance indicator of a company which discloses the profits and losses of the company and the position of assets and liabilities of the company at the end of the year.

To prepare:

The income statement

Explanation of Solution

Computation of income statement:

Company S Income Statement For the period ending XXXX
Particulars Amount ($) Amount ($)
Sales revenue 13,700
Less: COGS 3,800
Gross Profit(A) 9,900
Expenses
Salaries Expenses ...
To determine

(b)

Introduction:

Financial statements are the financial performance indicator of a company which discloses the profits and losses of the company and the position of assets and liabilities of the company at the end of the year.

To prepare:

The balance sheet

To determine

(c)

Introduction:

Financial statements are the financial performance indicator of a company which discloses the profits and losses of the company and the position of assets and liabilities of the company at the end of the year.

To prepare:

The contingent liability note

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Chapter 12 Solutions

Principles of Accounting Volume 1
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