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Alexandra [31]
2 years ago
9

The Commonwealth of Virginia filed suit in October 2014, against Northern Timber Corporation seeking civil penalties and injunct

ive relief for violations of environmental laws regulating forest conservation. When the financial statements were issued in 2015, Northern had not reached a settlement with state authorities, but legal counsel advised Northern Timber that it was probable the ultimate settlement would be $1,000,000 in penalties. The following entry was recorded: Loss—litigation ................................................................................................... 1,000,000 Liability—litigation ........................................................................................... 1,000,000 Late in 2016, a settlement was reached with state authorities to pay a total of $600,000 to cover the cost of violations. Required: 1. Prepare any journal entries related to the change. 2. Briefly describe other steps Northern should take to report the change.
Business
1 answer:
tatyana61 [14]2 years ago
4 0

Answer:

Northern Timber Corporation

1. Journal entries to record the change:

Debit Litigation Liability $1,000,000

Credit Cash $600,000

Credit Litigation Loss $400,000

To record the payment of the litigation liability and the reduction of litigation loss by $400,000.

2. Northern can restate the 2014 and 2015 Retained Earnings to reflect the change in the litigation loss.

Explanation:

a) Data and Calculations:

Records of probable loss from ultimate settlement:

2014:

Loss—litigation  1,000,000

Liability—litigation 1,000,000

2016:

Agreed settlement = $600,000

Analysis of Entries:

Litigation Liability $1,000,000

Cash $600,000

Litigation Loss $400,000

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3 years ago
Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each cleaning (cleaning one house
aev [14]

Answer:

$532,500

Explanation:

The question is to compute the Statement of Cost of Services Sold for Happy Home Helpers Inc.

To compute this statement, the approach is to sum all direct costs associated with the service provided by the firm.

Particulars                                                     Amount            Amount

Opening Inventory Of Materials                  $4,000

Add: The Purchase of Direct Materials       $<u>25,600</u>

Direct Material available                               $29,600

Subtract: Closing Inventory of materials    <u>   ($2600)</u>

The Direct Material Used for the year                                $27,000

Add:

Direct Labour Cost                                          $472,500

Variable Overhead Cost                                    $15,000

Fixed Overhead cost                                          $18,000

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The Cost of Services of HHH Inc                                          $532,500

7 0
3 years ago
The present value of a single sum is: Select one: A. The amount that would be paid today to receive a single amount at a specifi
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Answer:

The correct answer is letter "A": The amount that would be paid today to receive a single amount at a specified date in the future.

Explanation:

The present value (PV) of a single sum tells us how much a future sum of money is worth today given a specified rate of return. This is an important financial concept based on the principle that money received in a specific time in the future is not worth as much as an equal sum received today.

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While inserting an array function the excel user must press
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6 0
3 years ago
Use the information from the balance sheet and income statement below to calculate the following ratios:
Marina86 [1]

Answer:

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d. Inventory turnover  = COGS / inventory = 90,000 / 50,000 = 1.8

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f. Operating profit margin  = operating income / total sales = 65,000 / 210,000 = 0.31

g. Days in receivables  = (accounts receivables / total sales) x 365 = (30,000 / 210,000) x 365 =  52.14 days

h. Operating return on assets  = operating income / total assets = 65,000 / 525,000 = 0.12

i. Debt ratio  = total liabilities / total assets = 273,000 / 525,000 = 0.52

j. Fixed asset turnover  = total sales / fixed assets = 210,000 / 335,000 = 0.63

k. Return on equity = net income / total equity = 45,030 / 252,000 = 0.18

4 0
2 years ago
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