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ratelena [41]
3 years ago
12

The following three independent sets of facts relate to contingent liabilities: 1. In November of the current year an automobile

manufacturing company recalled all pickup trucks manufactured during the past two years. A flaw in the battery cable was discovered and the recall provides for replacement of the defective cables. The estimated cost of this recall is $2 million. 2. The EPA has notified a company of violations of environmental laws relating to hazardous waste. These actions seek cleanup costs, penalties, and damages to property. The company is reasonably certain there will be cost associated with the cleanup, but cannot estimate the amount. The cleanup cost could be as high as $4,000,000 or as little as $500,000 and insurance could reimburse all or part of the cost. There is no way to more accurately estimate the cost to the company at this time. 3. Holland Company does not carry property damage insurance because of the cost. The company has suffered substantial losses each of the past three years. However, it has had no losses for the current year. Management thinks this is too good to be true and is sure there will be significant losses in the coming year. However, the exact amount cannot be determined.
Business
1 answer:
aalyn [17]3 years ago
5 0

Answer:

Situation 1 is a probably contingency. This recall is occurring and can be estimated as costing $2 million. This amount should be charge to the warranties payable and warranties expense accounts.

Date

Particulars

Ref.no

Debit $

Credit $

Warrantee expenses

20,00,000

Warranty payable account

20,00,000

[To record the estimated claims]

Comment

Step 3 of 3

Situation 2 is a reasonable contingency. The costs are possible and there are rough estimates for cleanup but there are also rough estimates about reimbursements for property damage. This situation would be disclosed on the balance sheet.

Situation 3 is a remote contingency. There is a small change that there could be property damage but there is no way to determine how much or what the costs could be. There is no amount marked down for this situation

Explanation:

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Chocolate Co. reports the following information from its sales budget: ​ Expected sales:
maksim [4K]

Answer:

The total amount of cash expected to be received from customers in September is: B. $ 108,000

Explanation:

The total amount of cash expected to be received from customers in September include the following :

  1. <em>Cash Sales in the month of September - 25 %</em>
  2. <em>Cash Receipts from Accounts for August Sales - 75 %</em>

<u>The Calculation of cash expected to be received from customers in September is as follows :</u>

Cash Sales - September = 120,000 × 25% =  30,000

Credit Sales - August = 104,000 × 75%      =   78,000

Total                                                              =  108,000

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3 years ago
Axle Corporation acquires​ 100% of Drexel​ Corporation's stock from​ Drexel's shareholders for​ $500,000 cash. Drexel Corporatio
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Answer:

$500,000 Axle​ Corporation's basis in the Drexel Corporation stock.

5 0
3 years ago
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Tariffs and other trade restrictions increase the domestic scarcity of products from abroad. Such policies benefit domestic prod
MAXImum [283]

Answer: Option B

Explanation:

A trade restriction is an artificial restriction on the trade of goods and/or services between two or more countries.

The right option is B because the statement contains one error; domestic producers gain at the expense of foreign producers rather than domestic consumers.

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3 years ago
Demand is not the same as quantity demanded. What factors will change the demand for a good?
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Answer:

Other factors that shift demand curves. Income is not the only factor that causes a shift in demand. Other things that change demand include tastes and preferences, the composition or size of the population, the prices of related goods, and even expectations.

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company's product line in the dog food market

Explanation:

In the description provided, it can be said that Prime Cuts will be an addition to the company's product line in the dog food market. A product line is a group of related products all marketed under a single brand name and are sold by the same company to the same targeted group of consumers. Such as in this scenario, all of the products listed are dog treats/food with different ingredients and are all sold by the same company to people looking for dog food.

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