Based on financial calculations only and not any personal preferences, which of the following would rather have, or which will result in the highest collection of cash? Assume a 4% annual interest rate and compounding interest.

1. $222 in three years
2. $206 in one year
3. $200 today
4. $214 in two years

On January 1, 2021, Umbrella Insurance Company has collected $24,000 for multiple two-year insurance premiums and recorded the funds in Unearned Revenue. Umbrella records insurance revenue on a monthly basis. How much will be in the Unearned Revenue account on November 30, 2021?

1. $2,000
2. $11,000
3. $22,000
4. $13,000
5. None of these

Murals-R-Us Corporation is being sued for $12 million for age discrimination. The company lawyers believe it is probable the company will have to pay the $12 million on the lawsuit. How would the Murals-R-Us accountants account for this lawsuit?

1. Record the contingent liability in the financial statements for $12 million
2. Do not disclose the lawsuit
3. Record the contingent liability as a footnote in the financial statements
4. None of these

Prairie Company had sales of $1,500,000. Estimated warranty costs are 1% of sales. Work performed under warranties during the period actually cost $8,750. The entry to record the warranty liability includes:

1. a debit to Warranty Expense for $6,250.
2. a debit to Warranty Expense for $15,000.
3. none of these
4. a debit to Warranty Expense for $23,750.
5. a debit to Warranty Expense for $8,750.