December 1 5 20 Ritchie sold 11 go-karts on account. The selling price of each go-kart was $1,200; the cost of goods sold for each was $400. Ritchie received notice of a class-action lawsuit being filed against it. The lawsuit claims that Ritchie's go-karts have engine defects that appear after the warranty period expires. The plaintiffs want Ritchie to replaced the defective engines and pay damages for the owners' loss of use. The cost of replacing the engines would be approximately $395,000 (not including any damages). Ritchie's attorney believes that it is reasonably possible that Ritchie will lose the case, but the attomey cannot provide a dollar estimate of the potential loss amount. Ritchie performed repairs due to product warranty complaints for two go-karts sold earlier in the year. Ritchie's cost of the repairs, paid in cash, was $950. An individual claims that he suffered emotional distress from a high-speed ride on a Ritchie Go-Kart and is seeking $460,000 in damages. Ritchie's attomey believes the case is frivolous because it does not have any legal merit Another customer is suing Ritchie for $170,000 because a defect in the customer's Ritchie Go-Kart engine started a fire and destroyed the customer's garage. Ritchie's attorney believes the customer will probably win the case and receive $170,000. (Use the following account names: Loss from Lawsuit and Accrued Liability from Lawsuit.) Ritchie estimates that the warranty expense is 8% of gross sales. Ritchie's gross sales for the period totaled $770,000. 22 27 31 Print Done Requirement 1. Prepare the joumal entries to record the transactions shown. Omit explanations. (Record debits firs select "No entry required" in the first cell in the "Accounts" column and leave all other cells blank.) Dec 1: Ritchie sold 11 go-karts on account. The selling price of each go-kart was $1,200; the cost of goods sold for Do not record the cost related to the sale. We will do this in the next journal entry. Journal Entry Accounts Date Debit Credit Dec 1 Now record the cost related to the sale above. Journal Entry Accounts Date Debit Credit Dec 1 Choose from any list or enter any number in the input fields and then continue to the next question. Dec Rachie received notice of a class action lawsuit being filed against it. The lawsuit claims that Richie's gokarts have engine defects that appear her the warranty period expires. The plaintiff's want Ritchie to replace the defective engines and pay damages for the owners' loss of use. The cost of replacing the engines would be approximately $395.000 (not including any damages). Richie's attomey believes that it is reasonably possible that Rachie wil lose the case, but the attomey cannot provide a dolor estimate of the potential loss amount Journal Entry Date Accounts Debit Credit Dec 5 Choose from any ist or enter any number in the input fields and then continue to the next question Dec 20: Ritchie performed repairs due to product warranty complaints for we go-karts soldater in the year. Ritchie's cost of the repairs, paid in cash, was $950 Journal Entry Date Accounts Debit Credit Dec Dec 22. Arnold claims that he sufered emotional stress from high end ride on a Richie Go Kart and is seeking S480,000 in damages. Racher's stomay before the commous because I do not have me Journal Entry Ace Debit Credit Choose from your routes and then continue to the Dec 27: Another customer issuing Ritchie for $170.000 because defect in the customer's Race Go Kart engineered a fire and destroyed the customer's garage. Ritch's attomey believes the customer will probably win the case and receive $170.000 (Use the following accountnames: Loss from Lawsuit and Accrued Liability from Lawsuit) Journal Entry Date Accounts Debit Credit Dec 27 I Dec 3: Radhe e that the warranty penses of grosses he's grosses for the perioded 5770.000 Journal Entry Date Accounts Debit Credit Des Choose from any list or enter any number in the inputs and then continue to the next question Dec 31: Ritchie estimates that the warranty expense is 8% of gross sales. Ritchie's gross sales for the period totaled $770,000 Date Journal Entry Accounts Dec Debit 31 Credit Requirement 2. Describe how each of the contingent liabilities in the selected December transactions would be treated in Ritchie's financial statement A. Dec 22 transaction will not be footnoted because it is unlikely to be a loss. B. Dec 31 transaction will be reported as a liability on the balance sheet and an expense on the income statement Transaction will not be footnote C. Dec 5 transaction will be reported as a liability on the balance sheet and an expense on the income statement Transaction will also be footnoted D. Dec 27 transaction will be reported as a liability on the balance sheet and a loss on the income statement. Transaction will also be footnoted. Choose from any list or enter any number in the input fields and then continue to the next question. Requirement 2. Describe how each of the contingent liabilities in the selected December transactions would be treated in Ritchie's financial statements for 2018 (Select four answers.) A Dec 22transaction will not be footnoted because it is unlikely to be a loss B. Dec 31 transaction will be reported as a liability on the balance sheet and an expense on the income statement Transaction will not be footnoted since is recorded on the financial statements. C. Dec 5 transaction will be reported as a liability on the balance sheet and an expense on the income statement Transaction will also be footnoted. D. Dec 27 transaction will be reported as a liability on the balance sheet and a loss on the income statement Transaction will also be footnoted E Dec 31 transaction will be reported as a bity on the balance sheet and an expense on the income statement Transaction will also be footnoted F Dec 27 transaction will be reported as alability on the balance sheet and an expense on the income statement Transaction will not be footnoted since it is recorded on the financial statements LG Dec5transaction will be footnoted as a contingent ability H. Dec 22 transaction will be fooled as a contingent Choose from any list or enter any number in the input fields and then continue to the next