Apr. 30 Miles is party to a patent infringement lawsuit of $160,000. Miles's attorney is certain it is remote that Miles will lose this lawsuit. Estimated warranty expense at 4% of sales of $440,000. Warranty claims paid in the amount of $6,400. Miles is party to a lawsuit for copyright violation of $70,000. Miles's attorney advises that it is probable Miles will lose this lawsuit. The attorney estimates the loss at $70,000. Miles estimated warranty expense on sales for the second half of the year of $520,000 Jun. 30 Jul. 28 Sep. 30 Dec. 31 at 4%.
Apr. 30 Miles is party to a patent infringement lawsuit of $160,000. Miles's attorney is certain it is remote that Miles will lose this lawsuit. Estimated warranty expense at 4% of sales of $440,000. Warranty claims paid in the amount of $6,400. Miles is party to a lawsuit for copyright violation of $70,000. Miles's attorney advises that it is probable Miles will lose this lawsuit. The attorney estimates the loss at $70,000. Miles estimated warranty expense on sales for the second half of the year of $520,000 Jun. 30 Jul. 28 Sep. 30 Dec. 31 at 4%.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The following transactions of Dunn Miles occurred during 2018:
Requirements
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1.
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Journalize required transactions, if any, in Miles's general journal. Explanations are not required. |
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2.
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What is the balance in Estimated Warranty Payable assuming a beginning balance of $0?
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Transcribed Image Text:### Financial Events and Legal Matters for Miles Company
#### April 30
**Legal Matter: Patent Infringement Lawsuit**
- **Lawsuit Amount**: $160,000
- **Attorney's Assessment**: The likelihood that Miles will lose the lawsuit is considered remote.
#### June 30
**Financial Event: Warranty Expense Estimation**
- **Sales Amount**: $440,000
- **Estimated Warranty Expense**: 4% of sales, which equates to $17,600.
#### July 28
**Financial Event: Payment of Warranty Claims**
- **Paid Amount**: $6,400
#### September 30
**Legal Matter: Copyright Violation Lawsuit**
- **Lawsuit Amount**: $70,000
- **Attorney's Assessment**: It is probable that Miles will lose the lawsuit, with an estimated loss of $70,000.
#### December 31
**Financial Event: Warranty Expense Estimation for the Second Half of the Year**
- **Sales Amount**: $520,000
- **Estimated Warranty Expense**: 4% of sales, amounting to $20,800.
This document outlines the significant financial estimates and legal proceedings that occurred for Miles Company during the year. The warranty expenses are calculated as a percentage of sales, while legal matters are described with potential financial impacts assessed by the company's attorney.
Transcribed Image Text:**Requirement 1:** Journalize required transactions, if any, in Miles's general journal. Explanations are not required. (Record debits first, then credits. Exclude explanations from journal entries. For transactions 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.)
---
**Apr. 30:** Miles is party to a patent infringement lawsuit of $160,000. Miles's attorney is certain it is remote that Miles will lose this lawsuit.
| Date | Accounts | Debit | Credit |
|--------|----------|-------|--------|
| Apr. 30 | *No entry required* | | |
---
*Explanation of Diagram:*
The diagram consists of a table with columns labeled 'Date,' 'Accounts,' 'Debit,' and 'Credit.' Each column serves a specific purpose:
- **Date:** This column records the date of the transaction.
- **Accounts:** This column is used to list the account names involved in the transaction.
- **Debit:** This column is used to record the amount being debited in the transaction.
- **Credit:** This column is used to record the amount being credited in the transaction.
In this specific example, no entry is required on Apr. 30 because the lawsuit is deemed to have a remote chance of resulting in a loss. Therefore, the table reflects "No entry required" for this transaction, with the Debit and Credit columns left blank.
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