Problem 8-7B Record contingencies (LO8-5)

Compact Electronics is a leading manufacturer of digital camera equipment. Assume the following transactions occur during the year ended December 31, 2021.

1. Accounts receivable were $28.9 million (all credit) at the end of 2021. Although no specific customer accounts have been shown to be uncollectible, the company estimates that 2% of accounts receivable will eventually prove uncollectible.

2. Compact Electronics is the plaintiff in a $4.9 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 $3.4 million.

3. In November 2021, 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 $590,000.

4. 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 $2.4 to $3.4 million

Problem 8-7B Record contingencies (L08-5) Compact Electronics is a leading manufacturer of digital camera equipment. Assume the following transactions occur during the year ended December 31, 2021. 1. Accounts receivable were $28.9 million (all credit) at the end of 2021. Although no specific customer accounts have been shown to be uncollectible, the company estimates that 2% of accounts receivable will eventually prove uncollectible. 2. Compact Electronics is the plaintiff in a $4.9 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 $3.4 million. 3. In November 2021, 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 $590,000. 4. 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 $2.4 to $3.4 million. Required: Record any amounts as a result of each of these contingencies. (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, $5.5 million should be entered as 5,500,000.) View transaction list Journal entry worksheet 2 3 4 Record the estimated uncollectible accounts. 4. 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 $2.4 to $3.4 million. Required: Record any amounts as a result of each of these contingencies. (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, $5.5 million should be entered as 5,500,000.) View transaction list Journal entry worksheet