The following information is not included in the above balance sheet. Please explain treatment of the information and how it would be shown on the revised balance sheet.

a. Walbash has discovered that a product it began manufacturing and selling in 2016

has defective bearings, sometimes causing a wheel to fall off. Walbash has issued

a recall notice in newspapers and magazines in which it offers to replace the

bearings. It estimates the cost of $200,000 for these repairs. No lawsuits have

been filed for injury claims, although the company feels that there is a reasonable

possibility that claims may total as high as $2 million.

b.Walbash sold 1000 software packages for $300 each on credit (ignore cost of

goods sold). With each software package, Walbash offered a premium in the form

of a USB drive for the return of one proof of purchase. The offer expires June 30,

2017. The cost of each USB drive is $5 and Walbash estimates that 80% of the

premiums will be redeemed. In 2016, 540 premiums were redeemed.

Walbash Company Balance Sheet December 31,2016 Liabilities Current Liabilities sets t Assets S 3,800 Accounts Payable 19,400 4.100 7,200 4,000 Receivable 18,500 Accrued Wages Income Tax Payable Mortgage Payable Less: Allow ance for Doubtful Accounts nventory Sale Securities 17,800 30,500 4,800 Long Term Liabilities Mortgage Payable 16,000 40,000 Dray Company Bonds 9,000 Bonds Payable Property, Plant & Equipment Building Less: Accumulated Depreciation Equipment Less: Accumulated Depreciation Total Liabilities 90,700 83,400 21,000 29,600 13,000 42,400 18,00 Stakeholders Equity 12,000 Common Stock S 11,000 Additional Paid in Capital - Common Preferred Stock Additional Paid in Capital - Preferrec Retained Earnings Premium on Bond Payable Security for Sale Less: Treasury Stock 14,700 S 25,700 Intangible Assets Patent Less: Amortization Tredemarks 8,000 2,400 8,200 2300 8,400 37,800 5,900 3,700 4,300 1,100 1,800 Other Assets Prepaid Insurance Sinking Fund 3,600 4 2,900 7,000 10,000 Notes Recaivable Total Assets S 166 200 Total Liabilities & Stakeholders Equity S 168,200 Contingent Liability SPA Fine (b.) 50,000