6. Right Medical introduced a new implant that carries a five-year warranty against manufacturers defects. Based on industry experience with similar product introductions, warranty costs are expected to approximate 1% of sales. Sales were $27 million and actual warranty expenditures were $33,750 for the first year of selling the product. What amount (if any) should Right report as a liability at the end of the year? (Enter your answers in whole dollars.)

Warranty Liability
Beg. Bal.	?
	?	270,000	Warranty expense
Actual expenditures	?
End Bal.

7. Skill Hardware is the plaintiff in a $16 million lawsuit filed against a supplier. The litigation is in final appeal and legal counsel advises that it is virtually certain that Skill will win the lawsuit and be awarded $12 million.

How should Skill account for this event? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer.)

The contingency is acrrued.unchecked

The contingency is not accrued.unanswered

This is a gain contingency.checked

This is a loss contingency.unanswered

It is probable that the confirming event will occur.unanswered

The contingency can be reasonably estimated.unanswered

A disclosure note should describe the contingency.unanswered

None of theseunanswered

9. On November 1, 2018, Quantum Technology, a geothermal energy supplier, borrowed $4 million cash to fund a geological survey. The loan was made by Nevada BancCorp under a noncommitted short-term line of credit arrangement. Quantum issued a nine-month, 9% promissory note. Interest was payable at maturity. Quantums fiscal period is the calendar year.

Required: 1. Prepare the journal entry for the issuance of the note by Quantum Technology. 2. & 3. Prepare the appropriate adjusting entry for the note by Quantum on December 31, 2018 and journal entry for the payment of the note at maturity. (For all requirements, if no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

Record the issuance of the note by quantum technology

Date	General Journal	Debt	Credit
November 1, 2018	Cash	4,000,000
	Notes payable		4,000,000

Record the adjusting entry for the note by quantum on december 31, 2018

December 31, 2018	General Journal	Debt	Credit
	Interest expense	?
	Interest expense		?

Record the payment of the note at maturity

Date	General Journal	Debit	Credit
July 31, 2018	Interest expense	?
	Notes payable	4,000,000
	?