Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2024 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable, estimated to cost the company $3.9 million. The fiscal year ends on December 31.
Required: 1. Should this contingent liability be reported, disclosed in a note only, or neither? 2. What loss, if any, should Top Sound report in its 2024 income statement? 3. What liability, if any, should Top Sound report in its 2024 balance sheet? 4. What entry, if any, should be recorded?
Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2024 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable, estimated to cost the company $3.9 million. The fiscal year ends on December 31. Required: 1. Should this contingent liability be reported, disclosed in a note only, or nelther? 2. What loss, if any, should Top Sound report in its 2024 income statement? 3. What liability, if any, should Top Sound report in its 2024 balance sheet? 4. What entry, if any, should be recorded? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. What loss, if any, should Top Sound report in its 2024 income statement? (Enter your answer in dollars, not in millions (i.e. 5.5 million should be entered as 5,500,000).) Top Sound International designs and sells high-end stereo equipment for auto and home use. Engineers notified management in December 2024 of a circult flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable, estimated to cost the company $3.9 million. The fiscal year ends on December 31. Required: 1. Should this contingent liability be reported, disclosed in a note only, or neither? 2. What loss, if any, should Top Sound report in its 2024 income statement? 3. What llability, if any, should Top Sound report in its 2024 balance sheet? 4. What entry, if any, should be recorded? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. What liability, If any, should Top Sound report in its 2024 balance sheet? (Enter your answer in dollars, not in militons (li.e. 5.5 million should be entered as 5,500,000).) Top Sound International designs and sells high-end stereo equipment for auto and home use, Engineers notified management in December 2024 of a circuit flaw in an amplifier that poses a potential fire hazard. Further investigation indicates that a product recall is probable, estimated to cost the company $3.9 million. The fiscal year ends on December 31. Required: 1. Should this contingent liability be reported, disclosed in a note only, or neither? 2. What loss, if any, should Top Sound report in its 2024 income statement? 3. What liability, if any, should Top Sound report in its 2024 balance sheet? 4. What entry, if any, should be recorded? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. What entry, if any, should be recorded? (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions (i.e. 5.5 million should be entered as 5,500,000)
