1 Sessions Co. sold 200 units during 2014. The units have a warranty, and Sessions expects 2% of the products to be returned for repair. Each unit returned under warranty costs an average of $30 to repair. What amount of warranty liability does Sessions report at the end of 2014? a. $30 b. $120 c. $6,000 d. The company has no liability. Question 2 In 2014, Staley Co. enters into a contract with one of its customers, Prospect Inc. Prospect will take delivery 200 of Staley's products in January of 2015. Prospect will pay $14,000 for the products no later than February 2015 Does Staley's obligation to Prospect meet the criteria to be a liability? a. Obligation does not represent a probable future sacrifice b. Obligation is not unavoidable c. Obligation is not due to a past event or transaction d. Obligation meets all three criteria Question 3 What is the present value (within one or two dollars) of receiving a single payment of $1,000 4 years from now in a world where the cost of borrowing is 4% per year? a. $2,775 b. $889 c. $855 d. $1,000 Question 4 What is the present value (within one or two dollars) of receiving a payment of $50 at the end of each year for 4 years in a world where the cost of borrowing is 4% per year? a. $181 b. $50 c. $43 d. $139 Question 5 Suppose Walgreens enters into a 25-year lease on a store location. Walgreens has the option to buy the store building and land at the end of the lease. In year 1 of the lease, should Walgreens recognize the future lease payments as a liability while also recognizing the right to use the asset? Or are future rentals under this lease unexecuted contracts? What is your opinion based on your understanding of the definitions of liabilities and assets? NOT what GAAP requires. Use no more than 3 sentences