Apr. 30 Howe is party to a patent infringement lawsuit of $230,000. Howe's attorney is certain it is remote that Howe will lose this lawsuit. Jun. 30 Estimated warranty expense at 3% of sales of $390,000. Jul. 28 Warranty claims paid in the amount of $6,300. Sep. 30 Howe is party to a lawsuit for copyright violation of $90,000. Howe's attorney advises that it is probable Howe will lose this lawsuit. The attorney estimates the loss at $90,000. Howe estimated warranty expense on sales for the second half of the year of $520,000 at 3%. Dec. 31
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Journalizing liability transactions
The following transactions of Belkin Howe occurred during 2018:
Requirements
- Journalize required transactions, if any, in Howe’s general journal. Explanations are not required.
- What is the balance in Estimated Warranty Payable assuming a beginning balance of $0?
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