Compact Electronics is a leading manufacturer of digital camera equipment. Assume the following transactions occur during the year ended December 31, 2021. Accounts receivable were $27.5 million (all credit) at the end of 2021. Although no specific customer accounts have been shown to be uncollectible, the company estimates that 2% of accounts receivable will eventually prove uncollectible. Compact Electronics is the plaintiff in a $3.5 million lawsuit filed against a supplier. The suit is in final appeal, and attorneys advise it is virtually certain that Compact Electronics will win and be awarded $2 million. In November 2021, Compact Electronics became aware of a design flaw in one of its digital camera models. A product recall appears probable and would likely cost the company $450,000. Compact Electronics is the defendant in a patent infringement lawsuit brought by a competitor. It appears reasonably likely Compact Electronics will lose the case, and potential losses are estimated to be in the range of $1 to $2 million. Required: Record any amounts as a result of each of these contingencies. (If no entry is
Compact Electronics is a leading manufacturer of digital camera equipment. Assume the following transactions occur during the year ended December 31, 2021.
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Accounts receivable were $27.5 million (all credit) at the end of 2021. Although no specific customer accounts have been shown to be uncollectible, the company estimates that 2% of accounts receivable will eventually prove uncollectible. -
Compact Electronics is the plaintiff in a $3.5 million lawsuit filed against a supplier. The suit is in final appeal, and attorneys advise it is virtually certain that Compact Electronics will win and be awarded $2 million.
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In November 2021, Compact Electronics became aware of a design flaw in one of its digital camera models. A product recall appears probable and would likely cost the company $450,000.
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Compact Electronics is the defendant in a patent infringement lawsuit brought by a competitor. It appears reasonably likely Compact Electronics will lose the case, and potential losses are estimated to be in the range of $1 to $2 million.
Required:
Record any amounts as a result of each of these contingencies. (If no entry is required for a transaction/event, select "No
- Record the estimated uncollectible accounts.
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- Record the contingent gain if needed.
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- Record the
contingent liability if needed.Transaction General Journal Debit Credit 3 - Record the contingent liability if needed.
Transaction General Journal Debit Credit 4
- Record the contingent liability if needed.
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