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CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT Front Row has the following selected balances at the February 28, 2020: The following information is not reflected in these balances: a. On February 28, 2020, Front Row accepted delivery of $5,325 of live-performance DVDs from the supplier. Front Row has not yet paid the supplier. b. On February 1, Front Row purchased $8,000 of equipment for its Chicago Music House venue by issuing a 1-year note payable bearing 10% interest. Front Row has not made any journal entries related to this transaction and should accrue for this at month’s end. ( Note: Round any calculations to the nearest dollar.) c. Front Row collected $3,745 of advance ticket sales related to an upcoming concert. This price included 7% state sales tax. d. Amanda Wilson was paid $2,000 in wages to update and monitor the online fan communities. Federal and state unemployment taxes are $16 and $108, respectively. All of Amanda’s wages are subject to Social Security and Medicare at the normal rates. In addition, $375 of federal income taxes were withheld. ( Note: Round any calculations to the nearest dollar.) In addition, several individuals were injured during a concert in February when they pushed past security and rushed the stage. A personal injury lawsuit was filed against Front Row in the amount of $250,000. After investigating the incident and consultation with legal counsel, it was determined that the likelihood of a judgment against Front Row is remote. Required: How should this contingent event be recorded?

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 8, Problem 85.3C
Textbook Problem

CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT

Front Row has the following selected balances at the February 28, 2020:

Chapter 8, Problem 85.3C, CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT Front Row has the following selected balances at the

The following information is not reflected in these balances:

a. On February 28, 2020, Front Row accepted delivery of $5,325 of live-performance DVDs from the supplier. Front Row has not yet paid the supplier.

b. On February 1, Front Row purchased $8,000 of equipment for its Chicago Music House venue by issuing a 1-year note payable bearing 10% interest. Front Row has not made any journal entries related to this transaction and should accrue for this at month’s end. ( Note: Round any calculations to the nearest dollar.)

c. Front Row collected $3,745 of advance ticket sales related to an upcoming concert. This price included 7% state sales tax.

d. Amanda Wilson was paid $2,000 in wages to update and monitor the online fan communities. Federal and state unemployment taxes are $16 and $108, respectively. All of Amanda’s wages are subject to Social Security and Medicare at the normal rates. In addition, $375 of federal income taxes were withheld. ( Note: Round any calculations to the nearest dollar.)

In addition, several individuals were injured during a concert in February when they pushed past security and rushed the stage. A personal injury lawsuit was filed against Front Row in the amount of $250,000. After investigating the incident and consultation with legal counsel, it was determined that the likelihood of a judgment against Front Row is remote.

Required:

How should this contingent event be recorded?

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Chapter 8 Solutions

Cornerstones of Financial Accounting
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