At the start of April, Oscar Manufacturing had 50 accounting professor action figures on hand that cost $10 to manufacture. During the month of April, Oscar manufactured 100 more action figures at a cost of $11 per action figure and sold 80 action figures to customers at a price of $20 each.

Required: 1 How much profit did Oscar make during April from the sale of the action figures? Is there a single answer to this question? Briefly explain.

2 Assuming that Oscar chooses the FIFO method of accounting for cost of goods sold, give the journal entries needed to account for the sale of the action figures, assuming that customers purchased them on account.

3 Give the adjusting entry that would be needed to account for Oscars estimate that $100 of the accounts receivable would ultimately be uncollectible.

4 At the end of April, ODonovan, LLC, an attorney for C. Emily, notifies Oscar that Emily plans to sue Oscar. Emily claims that the action figures appear to be exact likenesses of J.Jackson , and when she saw one of the action figures in a store, it caused her severe mental distress because of her past trauma suffered in Jacksons accounting class many years ago. Emily is claiming damages for pain and suffering of $10 million.

Oscar's attorney, Savelson & Sullivan, LLC, advises Oscar that it is probable that Oscar will have to pay some amount of money as a result of this lawsuit, but it isnt possible to estimate how much the amount might be until the lawsuit is either settled or adjudicated.

Briefly explain the proper accounting treatment for these facts under GAAP and provide any journal entry that might be necessary.