The following three independent sets of facts relate to contingent liabilities: 1. In November of the current year, an automobile manufacturing company recalled all pickup trucks manufactured during the past two years. A flaw in the battery cable was discovered and the recall provides for replacement of the defective cables. The estimated cost of this recall is $2.4 million 2 The EPA has notified a company of violations of environmental laws relating to hazardous waste. These actions seek cleanup costs, penalties, and damages to property. The company is reasonably certain there will be cost associated with the cleanup, but cannot estimate the amount. The cleanup cost could be as high as $4.040,000 or as little as $540,000 and insurance could reimburse all or part of the cost. There is no way to more accurately estimate the cost to the company at this time, 3. Holland Company does not carry property damage insurance because of the cost. The company has suffered substantial losses each of the past three years. However, it has had no losses for the current year Management thinks this is too good to be true and is sure there will be significant losses in the coming year However, the exact amount cannot be determined. Required a. What are three categories of contingent liabilities? 1 2 b. For each item in the preceding list, determine the correct accounting treatment. Prepare any required journal entries (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet A B Record the warranty expense for event 1. Note: Enter debts before andito General Journal Event 1 Debit Credit R Record entry Clear entry View general journal b. For each item in the preceding list, determine the correct accounting treatment. Prepare any required Journal e required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the current year losses for property damage in event 3. Note: Enter debits before credits Event 3 General Journal Debit Credit Record entry Clear entry View general journal The Chail Company provides a 120 day parts-and-labor warranty on all merchandise it sells The Chair Company estimates the warranty expense for the current period to be $1120. During this period, a customer returned a product that cost $840 to repair Required: a. Show the effects of these transactions on the financial statements using a horizontal statements model Use for increase - for decrease, and NA for not affected in the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (LA), or financing activity (FA) b.& c. Prepare the journal entries to record the warranty expense for the period and payment for the actual repair costs. Complete this question by entering your answers in the tabs below. ReQA Red Band Show the atfects of these transactions on the financial statements cling a horizontal statements model. Use" for increase, for decrease, and NA for not affected. In the Cash Flow column, indicate whether the item is an operating activity (OA), Investing activity (IA), or financing activity (FA). (Leave no cells blank be certain to select "NA" wherever required.) Assets abilities - Equity Revenue Expenses Net Income Cash Flow Estimated wait any expense Actual waarty coolu pald Req Band C Required: a. Show the effects of these transactions on the financial statements using a horizontal statements model. Use decrease, and NA for not affected. In the Cash Flow column, indicate whether the item is an operating activity (O (1A), or financing activity (FA). b. & c. Prepare the journal entries to record the warranty expense for the period and payment for the actual repa Complete this question by entering your answers in the tabs below. Req A Reg Band Prepare the journal entries to record the warranty expense for the period and payment for the actual repair costs. (If for a transaction/event, select "No journal entry required in the first account field.) View transaction list Journal entry worksheet Record the warranty expense for the period. Note: Enter debits before credits Event General Journal Debit Credit b Record entry Clear entry View general Journal Complete this question by entering your answers in the tabs below. Boo Reg A Req Band Prepare the journal entries to record the warranty expense for the period and payment for the actual repair costs. (If no ent for a transaction/event, select "No journal entry required" in the first account field.) D erences View transaction list Journal entry worksheet Required a. Calculate the gross pay for each employee for the week b. Calculate the net pay for each employee for the week. c. Prepare the general journal entry to record payment of the wages. Complete this question by entering your answers in the tabs below. Reg A and B Regc Prepare the general journal entry to record payment of the wages. (If no entry is required for a transaction/event, select "No joumal entry required" in the first account field. Round your intermediate calculations and final answers to 2 decimal places.) View transaction list Journal entry worksheet 1 Record the entry to payment of wages. Note: Enter debits before credits General Journal Debit Credit Date Jan Record entry Clear entry View general journal Required Use the following information to prepare a multistep income statement and a classified balance sheet for Eller Equipment Co. for Year 1. (Hint Some of the items will not appear on either statement and ending retained earnings must be calculated) Salaries expense Common stock Notes receivable (short tere) Allowance for doubtful accounts Accumulated depreciation Notes payable long term) Salvage value of building Interest payable (short term) Uncollectible accounts expense Supplies Equipment Interest revenue Sales revenue Dividends Warranty expense Interest receivable (short term) $100,000 Beginning retained earnings 96.010 Warranties payable (short term) 18,500 Gain on sale of equipment 20,000 Operating expenses $2,000 Cash flow from Investing activities 146,000 Prepaid rent 16,000 Land 7.000 Cash 31,000 Inventory 5,100 Accounts payable 216,400 Interest expense 4,500 Salaries payable 912,000 Unearned revenue 21,000 Cost of goods sold 7,800 Accounts receivable 2,200 Depreciation expense $ 47,100 5.100 12,000 51,000 102,000 24,000 81,000 33,400 132,000 41.000 22,000 54,000 33,000 581,000 94,000 1,600 Complete this question by entering your answers in the tabs below. Income Statement Balance Sheet Prepare a multistep income statement for Eller Equipment Co. for Year 1. (Amounts to be deducted should be indicated with a minus sign) ELLER EQUIPMENT CO Income Statement For the Year Ending December 31. Year 1 Operating expenses Income Statement Balance Sheet Prepare a multistep income statement for Eller Equipment Co. for Year 1. (Amounts to be dedu minus sign.) ELLER EQUIPMENT CO. Income Statement For the Year Ending December 31, Year 1 es Operating expenses Total operating expenses Non-operating items Total non-operating items Doblo Balance Sheet > Income Statement Balance Sheet Prepare a multistep Balance sheet for Eller Equipment Co. for Year 1. (Amounts to be deducted should be minus sign.) ELLER EQUIPMENT CO. Balance Sheet As of December 31, Year 1 Assets Total current assets Property, plant and equipment Total property, plant and equipment Total assets Liabilities and Stockholders Equity Current liabilities 0505 Liabilities and Stockholders' Equity Perences Current liabilities Total current liabilities Long-term liabilities Total long-term liabilities Total liabilities Stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity