Below are listed transactions related to Nabisco Ltd Co. that started operations in April 2019. The company follows a calendar year basis and prepares its financial statements on December 31. It publishes them in April of the subsequent year. 

1. Total credit sales amounted to $300,000,000 for 2019. The company expects that 3% of credit sales might not be collected. 

2. Nabisco Ltd Co offers a one-year assurance warranty for all its products. Market experience indicates that warranty charges will approximately be 2% of sales. Actual warranty expenditures were $3,500,000 in 2019. 

3. In December, 2019, Nabisco was notified about a deficiency in one of its products that will result in a potential threat of injury. Accordingly, a product recall appears inevitable. This act would likely cost the company $1,500,000. 

4. On November 14, 2019, governmental authorities filed a suit against Nabisco Ltd Co., asking for civil penalties and compensations for violations of clean environmental laws. Nabisco Ltd Co reached a settlement with state authorities to pay $4,200,000 in penalties on February 15, 2020. 

5. Nabisco Ltd Co is the plaintiff in a $60,000,000 lawsuit filed against a customer for costs and lost profits from contracts rejected in 2019. The lawsuit is in final appeal and lawyers advise that it is virtually certain that Nabisco Ltd Co will be awarded $50 million. 

Required: 

Prepare the appropriate journal entries that should be recorded as a result of each of these situations. If no journal entry is indicated, state why

Answer rating: 100% (QA)

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