Thompson Go-Karts sells motorized go-karts. Thompson 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: (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 cells blank.) Dec 1: Thompson sold 15 go-karts on account. The selling price of each go-kart was $1,300; the cost of goods sold for each was $400. Do not record the cost related to the sale. We will do this in the next journal entry More Info Journal Entry Date Accounts Debit Credit Dec 1 December 1 Thompson sold 15 go-karts on account. The selling price of each gokart was $1,300; the cost of goods sold for each was $400. 5 Thompson received notice of a class-action lawsuit being filed against it. The lawsuit claims that Thompson's go-karls have engine defects that appear after the warranty period expires. The plaintiffs want Thompson to replace the defective engines and pay damages for the owners' loss of use. The cost of replacing the engines would be approximately $420,000 (not including any i Requirements damages). Thompson's attorney believes that it is reasonably possible that Thompson will lose the case, but the attorney cannot provide a dollar estimate of the potential loss amount. 20 Thompson performed repairs due to product warranty complaints for two 1. Prepare the journal entries to record the transactions showni. Omit go-karts sold earlier in the year. Thompson's cost of the repairs, paid in cash, explanations. was $800. 2. Describe how each of the contingent liabilities in the selected December 22 An individual claims that he suffered emotional distress from a high-speed ride transactions would be treated in Thompson's financial statements for 2019. on a Thompson Go-Kart and is seeking $470,000 in damages. Thompson's attorney believes the case is frivolous because it does not have any legal merit. 27 Another customer is suing Thompson for $230,000 because a defect in the Print Done customer's Thompson Go-Kart engine started a fire and destroyed the customer's garage. Thompson's attomey believes the customer will probably win the case and receive $230,000. (Use the following account names: Loss from Lawsuit and Accrued Liability from Lawsuit.) Choose from any list or enter any number in the input fields and then click Check Answer. 31 Thompson estimates that the warranty expense is 4% of gross sales. Thompson's gross sales for the period totaled $780,000. parts remaining 7
