Journal entry worksheet 1 Record the possible payment for a litigation whose likelihood of payment is determined to be reasonably possible. Note: Enter debits before credits.
Journal entry worksheet 1 Record the possible payment for a litigation whose likelihood of payment is determined to be reasonably possible. Note: Enter debits before credits.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the end of 2025, the following information is available for Great Adventures.
• Additional interest for five months needs to be accrued on the $36,000, 6% note payable obtained on August 1, 2024.
Recall that annual interest is paid each July 31.
• Assume that $12,000 of the $36,000 note discussed above is due next year. Record the entry to reclassify the current
portion of the long-term note.
• By the end of the year, $20,000 in gift cards have been redeemed. The company had sold gift cards of $25,300 during
the year and recorded those as Deferred Revenue.
• Great Adventures is a defendant in litigation involving a biking accident during one of its adventure races. The company
believes the likelihood of payment occurring is probable, and the estimated amount to be paid is $15,000.
• For sales of MU watches, Great Adventures offers a warranty against defect for one year. At the end of the year, the
company estimates future warranty costs to be $6,000.
2. If the likelihood of payment for the litigation is determined to be reasonably possible, what should Great Adventures record for this
possible payment. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
View transaction list
Journal entry worksheet
<
1
Record the possible payment for a litigation whose likelihood of payment is
determined to be reasonably possible.
Note: Enter debits before credits.
Date
December 31
General Journal
Debit
Credit
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Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
At the end of 2025, the following information is available for Great Adventures.
• Additional interest for five months needs to be accrued on the $36,000, 6% note payable obtained on August 1, 2024.
Recall that annual interest is paid each July 31.
• Assume that $12,000 of the $36,000 note discussed above is due next year. Record the entry to reclassify the current
portion of the long-term note.
• By the end of the year, $20,000 in gift cards have been redeemed. The company had sold gift cards of $25,300 during
the year and recorded those as Deferred Revenue.
• Great Adventures is a defendant in litigation involving a biking accident during one of its adventure races. The company
believes the likelihood of payment occurring is probable, and the estimated amount to be paid is $15,000.
• For sales of MU watches, Great Adventures offers a warranty against defect for one year. At the end of the year, the
company estimates future warranty costs to be $6,000.
2. If the likelihood of payment for the litigation is determined to be reasonably possible, what should Great Adventures record for this
possible payment. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
View transaction list
Journal entry worksheet
<
1
Record the possible payment for a litigation whose likelihood of payment is
determined to be reasonably possible.
Note: Enter debits before credits.
Date
December 31
General Journal
Debit
Credit
>
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