Financial Accounting Alexis Brogdon TV21215.48 PM - X Requirements pre info lecember 1 1. Prepare the journal entries to record the transactions shown. Omit explanations 2. Describe how each of the contingent liabilities in the selected December transactions would be treated in Driver's financial statements for 2019 5 20 Print Done Driven sold 14 go-karts on account. The selling price of each go-kart was 51400, the cost of goods sold for each was $500 Driven received notice of ass-action lawsuit being fried against it. The lawsuit claim that vers got have engine defects that appear the warranty period expres. The planniven to replace the defective engines and pay damages for the owner loss of The cost of replacing the begins would be approximately $300.000 not including anys) Drive attorney believes that resonably postalven wis the case, but the attomey cannot provide a dolor estimate of the potential loss amount Driven performed repairs due to product way complaints for two gokart sold earlier in the you. Driver's cost of the repairs, paid in cash was 600 An individual claims that he red emotional distress from a high-speed de on a Driven Go Kart and is seeking 5470,000 in damages. Driver's womey believes the case is frivolous because does not have any legalment Another customer issuing Driven for $250,000 because a defect in the customer's Driven Go Kart engine started a fire and destroyed the customer's garage. Drvenstorey believes the customer will probably win the case and receve $250,000 (Use the following accountames Lose from Law and Accredibility from Delven estimates that the warranty expenses 8% of gross sales Drven's grow sales for the period od 5790.000 22 Accounts 27 ODIO Dec + 31 Now record the cost related to the sale above Journal Entry Accounts Data Print Done Dec Driven Go Karts tele motorized gokarts. Driven Go-Karts are motored and are typically purchased by somentara and other recreation facilities, but are locationally purchased by individuals for their own personal use. The company uses a perpetual Inventory system. Selected ansactions in the month of December follow cick the loon to view the transactions) Read the requirements Requirement 1. Prepare the journal entries to record se transactions shown. Omplanations. Record destrst, there Esplanation are not guard. For shans that do not our entry, make sure to select "No entry gured in the first cel in the Account column and travel the castik) Dec 1Driven sold 14 gokarts on account. The selling price of each gokart was 51400. e cost of goods sold for each was $500 Do not record the cost related to the sale. We will do this in the next joumal entry Journal Entry Date Accounts Debit Credit Dec 1 Now record the cost related to the sale above Journal Entry Accounts Debit Creol Date Dec 1 Dec 5: Driven received notice of a class-action lawsuit being filed against it. The lawsuit claim that Driver's go-karts have engine defects that appear after the warranty period expires. The plaintiffswart Driven to replace the defective engines and pay damages for the owners' lows of use. The cost of replacing the engines would be approximately 5380,000 (not including any damagen). Driver's attorney believes that it is reasonably possible that Driven will lose the case, but the storey cannot provide a dollar estimate of the potential amount Journal Entry Date Accounts Debit Credit Dec 5 Dec 20: Driven performed report due to product warranty complaints for two gokarts sold cartier in the year. Drvene cost of the repairs and in case 600 Journal Entry Accounts Debit Credit Dec Date Dec 22: An individual claim that he suffered emotional distress from a high-speed ride on a Driven Go Kart and is seeking $470.000 n damages. Driver's attomey believes the case bivolous because it does not have any legal merit Dec 22. An individual claims that he suffered emotional distress from a high-speed ride on a Driven Go-Kart and is seeking 5470,000 in damages Driver's my believes the case is fous because it does not have any legal merit Journal Entry Accounts Debit Date Dec 22 Credit Dec 27 Another customer is suing Driven for 5250,000 because a defect in the customer's Driven Go Kart engine started a fire and destroyed the customer's garagn Dren's stomay be the customer will probably win the case and receive $250,000. (Use the following account names Loss from Law and Acond Liability from Lawsuit) Journal Entry Date Accounts Debit Credit 27 Dec Dec 31: Driven estimates that the warranty expense is 8% of gross sales. Driven's gross sales for the period totaled 5710,000 Journal Entry Data Accounts Debit Credit Dec 31 Requirement 2. Describe how each of the contingent liabilities in the selected December transaction would be treated in Drive's financial statements for 2010 Oct for ans) A. Dec 31 transaction will be reported as a lity on the balance sheet and expense on the income statement Transaction wit before 3. Dec 27 transaction will be reported as a liability on the balance sheet and an expense on the income statement Transaction will not be footnoted since it is recorded on the financial statements Dec 31 transaction wil be reported as a ability on the balance sheet and an expense on the income statement Transaction will not be footnoted since it is recorded on the financial status OD Dec 5 transaction will be reported as a liability on the balance sheet and an expense on the income atment Transaction will be fooled GE. Dec 27 transaction will be reported as a tablity on the balance sheet and a loss on the income statement Transaction will also be fooled F Dec 22 transaction will be footnoted as a contingent liability 0 Dec 5 transaction will be footnoted as a contingent liability HDec 22 transaction will not be footnoted because it is unlely to be a loss