13-25 113. Qualpoint provides em s its employees two weeks of paid vacation per year. As of December vacation time to be taken the following year Current Liabilities and Contingencies 31, 65 employees have eamed two weeks of If the average entry? a. Debit Salaries and weekly salary for these employees is $1,140, what is the required journal a sliWages Expense for $148.200 and credit Salaries and Wages Payable for $148,200 b. No journal entry required. Debit Salaries and Wages Payable for $147,600 and credit Salaries and Wages c. Debit Salaries Expense for $147,600 d. Debit Salaries and Wages Expense for $74.100 and credit Salaries and Wages Payable for $74,100 114. Sandy Shoes Foot Inc, is involved in itigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case The attorneys estimated that there is a 40% chance of losing if this is the case, their attorney estimated that the amount of any payment would be $500,000. What is the required journal entry as a result of this litigation? a Debit Litigation Expense for $500,000 and credit Litigation liability for $500,000 b. No journal entry is required c. Debit Litigation Expense for $200,000 and credit Litigation Liability for $200,000. d. Debit Litigation Expense for $300,000 and credit Litigation Liability for $300,000. Xtra Processes is involved with innovative approaches to finding energy reserves. Xtra recently built a facility to extract natural gas at a cost of $15 million. However, Xtra is also legally responsible to remove the facility at the end of its useful life of twenty years. This cost is estimated to be $21 million (the present value of which is $8 million). What is the journal entry required to record the asset retirement obligation? a. No journal entry required. b. Debit Natural Gas Facility for $21,000,000 and credit Asset Retirement Obligation for 115. $21,000,000 c. Debit Natural Gas Facility for $6,000,000 and credit Asset Retirement Obligation for $6,000,000 d. Debit Natural Gas Facility for $8,000,000 and credit Asset Retirement Obligation for $8,000,000. 116. Composite provides extended service contracts on electronic equipment sold through major retailers. The standard contract is for four years. During the current year, Composite provided 42,000 such warranty contracts at an average price of $81 each. Related to these contracts, the company spent $400,000 servicing the contracts during the current year and expects to spend $2,100,000 more in the future. What is the net profit that the company will recognize in the current year related to these contracts? a. $902,000 b. $3,002,000. C. $400,000. d. $450,500