Don't give answer in image format The following selected transactions relate to contingencies of Bowe-Whitney Incorporated. Bowe-Whitney's fiscal year ends onDecember 31, 2024, and financial statements are published in March 2025.1. Bowe-Whitney is involved in a lawsuit resulting from a dispute with a customer over a 2024 transaction. At December 31,attorneys advised that it was probable that Bowe-Whitney would lose $3 million in an unfavorable outcome. On February 12,2025, judgment was rendered against Bowe-Whitney in the amount of $14 million plus interest, a total of $15.2 million. Bowe-Whitney does not plan to appeal the judgment.2. Since August of 2024, Bowe-Whitney has been involved in labor disputes at two of its facilities. Negotiations between thecompany and the unions have not produced a settlement and, since January 2024, strikes have been ongoing at these facilities.It is virtually certain that material costs will be incurred but the amount of resultant costs cannot be adequately predicted.3. Bowe-Whitney is the defendant in a lawsuit filed in January 2025 in which Access Company seeks $10 million as an adjustmentto the purchase price related to the sale of Bowe-Whitney's hardwood division in 2024. The lawsuit alleges that Bowe-Whitneymisrepresented the division's assets and liabilities. Legal counsel advises that it is reasonably possible that Bowe-Whitney couldlose $5 million, but that it's extremely unlikely it could lose the $10 million asked for.4. At March 1, 2025, the EPA is in the process of investigating the possibility of environmental violations at one of Bowe-Whitney'ssites, but has not proposed a penalty assessment. Management feels an assessment is reasonably possible, and if anassessment is made, a settlement of up to $33 million is probable.Required:Prepare journal entries that should be recorded as a result of each of the above contingencies.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answersin nearest whole dollars.No1234Transaction1234Loss litigationNo journal entry requiredNo journal entry requiredX Answer is not complete.General Journal✓✓SDebit15 X5 XCredit10 X1X5,000,000 X

Particulars Debit (Amounts in million) Credit (Amounts in million) Loss on litigation account…

Answered: Prepare journal entries that should be…

Business

Accounting

Prepare journal entries that should be recorded as a result of each of the above contingencies.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter12: Corporations: Organization, Capital Structure, And Operating Rules

Section: Chapter Questions

Problem 43P

See similar textbooks

Similar questions

After years of experience, Dilcort Company reasonably estimated that a loss from a pending lawsuit was probable at September 30 of the current year. Dilcort Company estimated that the loss would amount to 57,500. Prepare the journal entry, if any, to record the lawsuit at its September 30 year-end.
Bourne Company provided the following selected transactions related to contingencies. The fiscal year on December 31, 2021 and financial statements are issued on March 31, 2022. Bourne is involved in a lawsuit resulting from a with a customer over a 2021 transaction. On Decembo 31, 2021, attorneys advised that it was probable that Bourne would lose P3,000,000 in an unfavorable outcome dispute * On February 15, 2022, judgment was rendered against Bourne in the amount f P4,000,000 plus interest P500,000. Bourne did not plan to appeal the judgment. Since August 2021, Bourne had been involved in labor dispute. Negotiations between the entity and the union have not produced a settlement. Since January 2021, strikes have been ongoing at these facilities. It is virtually certain that material costs will be incurred but the amount of resultant costs cannot be adequately predicted. Bourne is the defendant in a lawsuit filed in January 2022 in which the plaintiff seeks P5,000,000 as an…
Munabhai
Dodd Corp. is preparing its December 31 financial statements and must determine the proper accounting treatment for the following situations • For the year ended December 31, Dodd has a loss carry forward of $180,000 available to offset future taxable income, However, there are no temporary differences. On December 30, Dodd received a $200,000 offer for its patent Dodd's management is considering whether to sell the patent. The offer expires on February 28 of the next year. The patent has a carrying amount of $100,000 at December 31 Assume a current and future income tax rate of 21 percent. In its income statement, Dodd should recognize an increase in net income of O $0 O $37,800 $79,000
On November 5, 2020, a Dunn Company truck was in an accident with an auto driven by Bell. The entity received notice on January 12, 2021 of a lawsuit for P700,000 damages for personal injuries suffered by Bell. The entity's counsel believed it is probable that Bell will be awarded an estimated amount in the range between P200,000 and P500,000. The possible outcomes are equally likely. The accounting year ends on December 31 and the 2020 financial statements were issued on March 31, 2021. What amount of provision should be accrued on December 31, 2020?
The following selected circumstances relate to pending lawsuits for Erismus, Incorporated Erismus’s fiscal year ends on December 31. Financial statements are issued in March 2025. Erismus prepares its financial statements according to U.S. GAAP. Required: Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $1,430,000. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $2,830,000 to $5,660,000, with any damage in that range equally likely. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court.…
On June 30, 2018, Streeter Company reported the following account balances:On June 30, 2018, Princeton Company paid $310,800 cash for all assets and liabilities of Streeter, which will cease to exist as a separate entity. In connection with the acquisition, Princeton paid $15,100 in legal fees. Princeton also agreed to pay $55,600 to the former owners of Streeter contingent on meeting certain revenue goals during 2019. Princeton estimated the present value of its probability adjusted expected payment for the contingency at $17,900.In determining its offer, Princeton noted the following pertaining to Streeter:• It holds a building with a fair value $43,100 more than its book value.• It has developed a customer list appraised at $25,200, although it is not recorded in its financial records.• It has research and development activity in process with an appraised fair value of $36,400. However, the project has not yet reached technological feasibility and the assets used in the activity…
The following selected circumstances relate to pending lawsuits for Erismus, Incorporated Erismus's fiscal year ends on December 31. Financial statements are issued in March 2025. Erismus prepares its financial statements according to IFRS. Required: Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances. 12345 1. 2. 3. 4. 5. 1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $1,000,000. 2. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $2,000,000 to $4,000,000, with any damage in that range equally likely. 3. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the…
Cocoa Corporation is preparing its December 31, 2023 financial statements. On March 1, the company settled a lawsuit for which it had accrued a contingent liability (loss) of $1,600,000. The amount of the settlement was $1,750,000. The financial statements were issued on March 10, 2024. Which of the following is correct regarding the settlement of the lawsuit? Question 9Answer a. The additional loss of $150,000 will be reported in the 2024 financial statements. b. No contingent liability will be reported on the 2023 Balance Sheet since the suit has been settled. c. This is not a recognized subsequent event because this information about the settlement was not known at year-end. Therefore, no adjustment is required. d. Cocoa should make an adjusting entry to adjust the estimated loss to the actual amount. Net income for 2023 will decrease by $150,000 (ignoring taxes).
The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus's fiscal year ends on December 31. Financial statements are issued in March 2022. Erismus preparés its financial statements according to IFRS. Required: Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances. 1. Erismus is defending against a lawsuit. Erismus's management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $2,500,000. 2. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $3,500,000 to $5,500,000, with any damage in that range equally likely. 3. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court. If it…
Cullumber Company has a December 31 fiscal year end. Selected information follows for Cullumber Company for two independent situations as at December 31, 2024: 1. Cullumber purchased a patent from Marin Inc. for $471,000 on January 1, 2021. The patent expires on January 1, 2029. Cullumber has been amortizing it over its legal life. During 2024, Cullumber determined that the patent's economic benefits would not last longer than six years from the date of acquisition. 2. Cullumber has a trademark that had been purchased in 2017 for $265,000. During 2023, the company spent $50,000 on a lawsuit that successfully defended the trademark. On December 31, 2024, it was assessed for impairment and the recoverable amount was determined to be $279,000. For each of these assets, determine what, if anything, will be recorded on Cullumber's 2024 income statement. Be specific about the account name and the amount. (Round answers to O decimal places, e.g. 5,276.) Cullumber Company Income Statement…
Bridgeport Corporation commenced operations in early 2025. The corporation incurred $44,500 of costs such as fees to underwriters, legal fees, state fees, and promotional expenditures during its formation. Prepare journal entries to record the $44,500 expenditure and 2025 amortization, if any. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries.). Account Titles and Explanation (To record costs incurred) (To record amortization expense) Debit Credit