The following selected transactions relate to contingencies of Classical Tool Makers, Incorporated, which began operations in...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The following selected transactions relate to contingencies of Classical Tool Makers, Incorporated, which began operations in July 2024. Classical's fiscal year ends on December 31. Financial statements are issued in April 2025. 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 5% of sales. Sales were $2.6 million (all credit) for 2024. Actual warranty expenditures were $51,400 and were recorded as warranty expense when incurred. 2. Although no customer accounts have been shown to be uncollectible, Classical estimates that 2% of credit sales will eventually prove uncollectible. 3. In December 2024, the state of Tennessee filed suit against Classical, seeking penalties for violations of clean air laws. On January 23, 2025, Classical reached a settlement with state authorities to pay $2.1 million in penalties. 4. Classical is the plaintiff in a $4.6 million lawsuit filed against a supplier. The suit is in final appeal and attorneys advise that it is virtually certain that Classical will win the case and be awarded $3.1 million, an amount that is material to Classical. 5. In November 2024, Classical became aware of a design flaw in an industrial saw that poses a potential electrical hazard. A product recall appears unavoidable. Such an action would likely cost the company $560,000. 6. Classical offered $30 cash rebates on a new model of jigsaw. Customers must mail in a proof-of-purchase seal from the package plus the cash register receipt to receive the rebate. Experience suggests that 60% of the rebates will be claimed. Ten thousand and six hundred of the jigsaws were sold in 2024. Total rebates to customers in 2024 were $111,000 and were recorded as promotional expense when paid. Required: 1-a. Prepare the year-end entries for any amounts that should be recorded as a result of each of the above contingencies. 1-b. Indicate whether a disclosure note is needed for the above transactions. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Prepare the year-end entries for any amounts that should be recorded as a result of each of the above contingencies. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars. The following selected transactions relate to contingencies of Classical Tool Makers, Incorporated, which began operations in July 2024. Classical's fiscal year ends on December 31. Financial statements are issued in April 2025. 1. Classical's products carry a one-year warranty against manufacturer's defects. Based on previous experience, warranty costs are expected to approximate 5% of sales. Sales were $2.6 million (all credit) for 2024. Actual warranty expenditures were $51,400 and were recorded as warranty expense when incurred. 2. Although no customer accounts have been shown to be uncollectible, Classical estimates that 2% of credit sales will eventually prove uncollectible. 3. In December 2024, the state of Tennessee filed suit against Classical, seeking penalties for violations of clean air laws. On January 23, 2025, Classical reached a settlement with state authorities to pay $2.1 million in penalties. 4. Classical is the plaintiff in a $4.6 million lawsuit filed against a supplier. The suit is in final appeal and attorneys advise that it is virtually certain that Classical will win the case and be awarded $3.1 million, an amount that is material to Classical. 5. In November 2024, Classical became aware of a design flaw in an industrial saw that poses a potential electrical hazard. A product recall appears unavoidable. Such an action would likely cost the company $560,000. 6. Classical offered $30 cash rebates on a new model of jigsaw. Customers must mail in a proof-of-purchase seal from the package plus the cash register receipt to receive the rebate. Experience suggests that 60% of the rebates will be claimed. Ten thousand and six hundred of the jigsaws were sold in 2024. Total rebates to customers in 2024 were $111,000 and were recorded as promotional expense when paid. Required: 1-a. Prepare the year-end entries for any amounts that should be recorded as a result of each of the above contingencies. 1-b. Indicate whether a disclosure note is needed for the above transactions. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Prepare the year-end entries for any amounts that should be recorded as a result of each of the above contingencies. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.
Expert Answer:
Answer rating: 100% (QA)
Req 1A Prepare the yearend entries for any amounts that should be recorded as a result of each of th... View the full answer
Related Book For
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
Posted Date:
Students also viewed these accounting questions
-
Smithville is a community of 100,000 persons (45,000 females, 55,000 males). During 1985, there were 1,000 deaths from all causes. All cases of tuberculosis have been found, and they total 300: 200...
-
The following selected transactions relate to contingencies of Classical Tool Makers, Inc., which began operations in July 2011. Classicals fiscal year ends on December 31. Financial statements are...
-
A health care facility in a metropolitan area is interested in the efficiency of its laboratory turnaround time. Based on data collected over last year, the mean turn around time was found to be 55...
-
Maeola Killebrew invests $3,800 at 2% compounded semiannually for two years. What is the future value of the investment, and how much interest will she earn over the two-year period?
-
A water tank of a diameter of 3 mand a height of 20 m is filled to the brim. An orifice at the bottom of the tank with a diameter0.02 mis opened to allow water to escape. The orifice has a rounded...
-
Water flows in a rectangular channel that is \(2.0 \mathrm{~m}\) wide as shown in Fig. P3.124. The upstream depth is \(70 \mathrm{~mm}\). The water surface rises \(40 \mathrm{~mm}\) as it passes over...
-
Wolsey Industries Inc. expects to maintain the same inventories at the end of 20Y3 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to...
-
At 1 2 / 3 1 / 2 2 , the end of Jenner Company's first year of business, inventory was $ 6 , 1 0 0 and $ 5 , 1 0 0 at cost and at market, respectively. Following is data relative to the 1 2 / 3 1 / 2...
-
n Activity 5: Keeping Track of Energy in Electric Circuit Interactions S2. Repeat question S1 but for a later time when the battery and motor/fan are in their equilibrium states. That is: Both the...
-
Traditional IPOs have been the only way to access public equity markets. Briefly describe two alternative methods to raise equity capital in public markets. Name at least three disadvantages for...
-
Given that lim f(x)=-7 and lim g(x) = 8, find the following limit. x-1 X-1 6-f(x) lim x-1 x+g(x) 6-f(x) lim x-1 x+g(x) (Simplify your answer.)
-
Michelle had to come up with a unique data collection and analysis project to present to the class. After much hair-pulling and teeth-grinding, she came up with a cool idea. Michelle's brother mowed...
-
Your Client Mr. Smith has booked the appointment with your associate and is exploring a variety of Investment and retirement planning options. He wants to better understand the offerings available to...
-
Q1. Write down the expression for the Weizsacker semi-emperical Mass Formula, explaining the reasoning behind each of the following terms a) The Volume term b) The Surface term c) The Coulomb Term d)...
-
Write a paper on the following items. Compare and contrast the operational challenges computer services limited (CSL) would face in delivering it solutions as opposed to its traditional business....
-
If the annual fixed costs are 54,000 dinars, the occupation expense represents 20%, the contribution margin is 25%, and the unit selling price is 40 dinars. Required: Calculate the closing point of...
-
Why is wage and price flexibility crucial to the idea of the invisible hand?
-
Here are some macroeconomic data for the country of Oz for the years 2014 and 2015. As the data suggest, Oz produces only potatoes, and its monetary unit is the shekel. Calculate each of the...
-
Graph the behavior of the civilian unemployment rate from 1961 until the present using monthly data. Can you see the periods of recession that occurred in 19691970, 19731975, 1980, 19811982,...
Study smarter with the SolutionInn App