Froggy Go-Karts sells motorized go-karts. Froggy Go-Karts are motorized and are typically purchased by amusement parks and other recreation facilities, but are also occasionally purchased by individuals for their own personal use. The company uses a perpetual inventory system. Selected transactions in the month of December follow: i (Click the icon to view the transactions.) Read the requirements Requirement 1. Prepare the journal entries to record the transactions shown. Omit explanations. (Record debits first, then credits. Explanations are not required. For situations that do not require an entry, make sure to select "No entry required" in the first cell in the "Accounts" column and leave all other fields blank.) Dec 1: Froggy sold 13 go-karts on account. The selling price of each go-kart was $1,500; the cost of goods sold for each was $550. Do not record the cost related to the sale. We will do this in the next journal entry. Journal Entry Date Accounts Debit Credit Requirements Dec 1 1. 2. 2 Prepare the journal entries to record the transactions shown. Omit explanations. Describe how each of the contingent liabilities in the selected December transactions would be treated in Froggy's financial statements for 2022. Print Done More Info December 1 Froggy sold 13 go-karts on account. The selling price of each go-kart was $1,500; the cost of goods sold for each was $550. December 5 Froggy received notice of a class-action lawsuit being filed against it. The lawsuit claims that Froggy's go-karts have engine defects that appear after the warranty period expires. The plaintiffs want Froggy to replace the defective engines and pay damages for the owners' loss of use. The cost of replacing the engines would be approximately $425,000 (not including any damages). Froggy's attorney believes that it is reasonably possible that Froggy will lose the case, but the attorney cannot provide a dollar estimate of the potential loss amount. December 20 Froggy performed repairs due to product warranty complaints for two go-karts sold earlier in the year. Froggy's cost of the repairs, paid in cash, was $650. December 22 An individual claims that he suffered emotional distress from a high-speed ride on a Froggy Go-Kart and is seeking $470,000 in damages. Froggy's attomey believes the case is frivolous because it does not have any legal merit. December 27 Another customer is suing Froggy for $210,000 because a defect in the customer's Froggy Go-Kart engine started a fire and destroyed the customer's garage. Froggy's attorney believes the customer will probably win the case and receive $210,000. (Use the following account names: Loss from Lawsuit and Accrued Liability from Lawsuit.) December 31 Froggy estimates that the warranty expense is 10% of gross sales. Froggy's gross sales for the period totaled $710,000
