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 follow: (Click the icon to view the transactions.) Read the requirements. More info December 1 December 5 Requirement Prepare the journal entnes to record the transactions shown. Umit explanations. (Kecord debits first, then credits. Explanations are not required. For situations that do not require an en Dec 1: Thompson sold 12 go-karts on account. The selling price of each go-kart was $1,400; the cost of goods sold for each was $750. Do not record the cost related to the sale. We will do this in the next journal entry. Date Dec 1 Inventory Note Payable, Short-term Journal Entry Accounts Debit Credit Now record the cost related to the sale above. Journal Entry Date Accounts Debit Credit Dec 1 Thompson sold 12 go-karts on account. The selling price of each go-kart was $1,400; the cost of goods sold for each was $750. Thompson received notice of a class-action lawsuit being filed against it. The lawsuit claims that Thompson's go-karts 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 $405,000 (not including any damages). Thompson's attorney believes that it is reasonably possible that Thompson will lose the case, but the attomey cannot provide a dollar estimate of the potential loss amount. December 20 Thompson performed repairs due to product warranty complaints for two go-karts sold earlier in the year. Thompson's cost of the repairs, paid in cash, was $750. December 22 An individual claims that he suffered emotional distress from a high-speed ride on a Thompson Go-Kart and is seeking $540,000 in damages. Thompson's attorney believes the case is frivolous because it does not have any legal merit. Another customer is suing Thompson for $180,000 because a defect in the customer's Thompson Go-Kart engine started a fire and destroyed December 27 the customer's garage. Thompson's attorney believes the customer will probably win the case and receive $180,000. (Use the following account names: Loss from Lawsuit and Accrued Liability from Lawsuit.) December 31 Thompson estimates that the warranty expense is 6% of gross sales. Thompson's gross sales for the period totaled $790,000. Print Done of Decer Dec 5: Thompson received notice of a class-action lawsuit being filed against it. The lawsuit claims that Thompson's go-karts 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 $405,000 (not including any 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. Date Dec 5 Journal Entry Accounts Debit Credit Dec 20: Thompson performed repairs due to product warranty complaints for two go-karts sold earlier in the year. Thompson's cost of the repairs, paid in cash, was $750. Date Dec 20 Journal Entry Accounts Debit Credit Dec 22: An individual claims that he suffered emotional distress from a high-speed ride on a Thompson Go-Kart and seeking $540,000 in damages. Thompson's attorney believes the case is frivolous because does not have any legal merit.