Jameson Go-Karts sells motorized go-karts. Jameson 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:
(Sorry for the blurred boxes, there are four boxes respectively, (4 under Accounts, Debit, and Credit)
More Info December 1 Jameson 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. Jameson received notice of a class-action lawsuit being filed against it. The lawsuit claims that Jameson's go-karts have engine defects that appear after the warranty period expires. The plaintiffs want Jameson to replace the defective engines and pay damages for the owners' loss of use. The cost of replacing the engines would be approximately $390,000 (not including any damages) Jameson's attorney believes that it is reasonably possible that Jameson will lose the case, but the attorney cannot provide a dollar estimate of the potential loss amount. 5 20 Jameson performed repairs due to product warranty complaints for two go-karts sold earlier in the year. Jameson's cost of the repairs, paid in cash, was $900. 22An individual claims that he suffered emotional distress from a high-speed ride on a Jameson Go-Kart and is seeking $520,000 in damages. Jameson's attorney believes the case is frivolous because it does not have any legal merit Another customer is suing Jameson for $250,000 because a defect in the customer's Jameson Go-Kart engine started a fire and destroyed the customer's garage. Jameson's attorney believes the customer will probably win the case and receive $250,000. (Use the following account names: Loss from Lawsuit and Accrued Liability from Lawsuit.) Jameson estimates that the warranty expense is 3% of gross sales. Jameson's gross sales for the period totaled $730,000. 27 31 PrintDone Requirements 1. 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 Jameson's financial statements for 2019 2. Print Done Janeso Go-Karts sels mstorized go-karts. Jan Go Karis are mtoriced ad are typicaly purchased by amuserment parks and ocher recreation faciliies, but are alsa ocaonlly purchased by indvidusls for their awn persornal use.The any use a perpetual ventory sy Selected Iransections in hemonih of Decemuer folow: (Click the ioon to view the trarsactions.] Read the terurements Requirement 1 Prepare the ouma entr esoor transactionssnown. O it explanations. Record debits frst en credits. Exp ana ons are no equired. For sit ations that co no requre an entry, make sure to select No entry regure leave all other cells blank.) Dec 1: Jemeson sold 11 go-karts on account. The selling price of eacn go-kart was $1 200; the coet of goods sold for esch was $400 Da nat record the oast related bo the sale Wwil do this in tha ex aal entry n he ist oall th 'Accounts olumn and Journal Entry Date Accounts Debit Credit Dec Naw racard tha cnalated to the sala AhovA Journal Entry Date Accounts Debit Credit Dec pm n bain 1 far the tnly tain.amo i rroite a dalar ashmatn of th and a dmgas tase, but thnamlar.lamason tn JournalE Account Debit Credit Deu Dec 20: Jaesu perarmed repairs due o producl warranty complairs for two go karts sod earierin the year. Jameson'sst of the repais, uaid nach, was S30o. Journal E Date Debit Credit Dec 20 Dec 22: An ndividLal ar is that he suffered emn ona de ess om 3 hgn s eed nde an 3 Jameson Go-kar and is seeking S522.000 n carrages. Jaresons atomey be e es sun's altlumey beieves case is r olaus because does not have any egal ment. JournalE Date Accounte Debit Credit Dec 2 ames: Loss frum Lawui and Accrued Liabiity from Lawsuit) Journal Entry Date Accounts Debit Credit Dec 27 Dec 31. Jameson eetimates lhat the warranty exoenee is 3% or gross 8alee. Jameson's groee 8aes for the per od totaled $730.000. Journal Entry Dato Dobit Don 31 Requirement 2escrite now each ofthe contingent iaalines n the selGded60 mbar Iransactions would be traa-ad n Jamason's tnarc state ents to 2019 Selec our answers. B. Dec 3 transaction will be repo ed asy liability the balance sheet ard an exuense on th! ncome siaterrent Transaction wil not be poimoteu snce t is recorted on th fnarcas state ments. C. Dec 22 tensaction will not be footnoted becauset is unlikely to be a loea D. Dnc 31 transaction wil te rported as a liability on the balance shnat and an eKannsa on tha income statement. Transactian wil alsa be fotnated. O E. Dnc 22 transactinn All tefnatnond as Dec 7 ransaclion will be reported as a liability on the balance sheet and an exuense on the income slaterrent ran acionwill not be coinoted sne lLis recorced on th fnanas state menis. Dec 27 transaction will be reported 88 a liability on the balance sheet end a loss on the income statement Transaction will also be totroted. narongent liability. F. G, H. Dac 6 transactian wil br fatnoted as a continger: labity. Chooso from any list or entrr any number in the input fields and then continue to the next quastion
