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Problem $8-7$B $($Static$)$ Record contingencies $($LO$8-5)$

$2\mathrm{.}5$ points

Compact Electronics is a leading manufacturer of digital camera equipment. Assume the following transactions occur during the year ended December $31,2024.$

Accounts receivable were $$29$ million $($all credit$)$ at the end of $2024.$ Although no specific customer accounts have been shown to be uncoll$$ctible$,$ the company estimates that $3\%$ of accounts receivable will eventually prove uncollectible.

Compact Electronics is the plaintiff in a $$5$ million lawsuit filed against a supplier. The suit is in final appeal, and attorneys advise it is virtually certain that Compact Electronics will win and be awarded $$3\mathrm{.}5$ million.

In November $2024,$ Compact Electronics became aware of a design flaw in one of its digital camera models. A product recall appears probable and would likely cost the company $$600,000.$

Compact Electronics is the defendant in a patent infringement lawsuit brought by a competitor. It appears reasonably likely Compact Electronics will lose the case, and potential losses are estimated to be in the range of $$2\mathrm{.}5$ to $$3\mathrm{.}5$ million.

Required:

Determine the appropriate way Compact Electronics would report the contingencies. Record any amounts as a result of each of these contingencies if required. $($If no entry is required for a transaction$/$event$,$ select $"$No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $$5\mathrm{.}5$ million should be entered as $5,500,000.)$

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Journal entry worksheet

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Accounts receivable were $$29$ million $($all credit$)$ at the end of $2024.$ Although no specific customer accounts have been shown to be uncollectible, the company estimates that $3\%$ of accounts receivable will eventually prove uncollectible. Record the adjusting entry.