Question
In May of 2021, Raymond Financial Services became involved in a penalty dispute with the EPA. At December 31, 2021, the environmental attorney for Raymond
In May of 2021, Raymond Financial Services became involved in a penalty dispute with the EPA. At December 31, 2021, the environmental attorney for Raymond indicated that an unfavorable outcome to the dispute was probable. The additional penalties were estimated to be $765,000 but could be as high as $1,160,000. After the year-end, but before the 2021 financial statements were issued, Raymond accepted an EPA settlement offer of $890,000. Raymond should have reported an accrued liability on its December 31, 2021, balance sheet of:
Group of answer choices
$765,000.
$270,000.
$890,000.
$1,160,000.
At the beginning of 2021, Angel Corporation began offering a two-year warranty on its products. The warranty program was expected to cost Angel 4% of net sales. Net sales made under warranty in 2021 were $206 million. Fifteen percent of the units sold were returned in 2021 and repaired or replaced at a cost of $5.30 million. The amount of warranty expense on Angel's 2021 income statement is:
Group of answer choices
$30.90 million.
$5.30 million.
$11.64 million.
$8.24 million.
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