Problem 8-7B Record contingencies (LO8-5) Compact Electronics is a leading manufacturer of digital camera equipment. Assume the following transactions occur during the year ended December 31, 2021. 1. Accounts receivable were $27.9 million (all credit) at the end of 2021. Although no specific customer accounts have been shown to be uncollectible, the company estimates that 1% of accounts receivable will eventually prove uncollectible. 2. Compact Electronics is the plaintiff in a $3.9 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 $2.4 million. 3. 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 $490,000. 4. 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 $1.4 to $2.4 million. Required: Record any amounts as a result of each of these contingencies. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $5.5 million should be entered as 5,500,000.) X Answer is not complete. No Transaction General Journal Debit Credit
Problem 8-7B Record contingencies (LO8-5) Compact Electronics is a leading manufacturer of digital camera equipment. Assume the following transactions occur during the year ended December 31, 2021. 1. Accounts receivable were $27.9 million (all credit) at the end of 2021. Although no specific customer accounts have been shown to be uncollectible, the company estimates that 1% of accounts receivable will eventually prove uncollectible. 2. Compact Electronics is the plaintiff in a $3.9 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 $2.4 million. 3. 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 $490,000. 4. 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 $1.4 to $2.4 million. Required: Record any amounts as a result of each of these contingencies. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $5.5 million should be entered as 5,500,000.) X Answer is not complete. No Transaction General Journal Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 8-7B Record contingencies (LO8-5)
Compact Electronics is a leading manufacturer of digital camera equipment. Assume the following transactions occur during the year
ended December 31, 2021.
1. Accounts receivable were $27.9 million (all credit) at the end of 2021. Although no specific customer accounts have been shown to
be uncollectible, the company estimates that 1% of accounts receivable will eventually prove uncollectible.
2. Compact Electronics is the plaintiff in a $3.9 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 $2.4 million.
3. 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 $490,000.
4. 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 $1.4 to $2.4 million.
Required:
Record any amounts as a result of each of these contingencies. (If no entry is required for a transaction/event, select "No Journal
Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $5.5 million should be
entered as 5,500,000.)
X Answer is not complete.
No
Transaction
General Journal
Debit
Credit
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