Question:67 During 2014, Leucothea Co. became involved in a legal dispute with a supplier. At December 31, 2014, Leucothea's legal advisor believed that an unfavorable outcome was probable. A reasonable estimate of resulting monetary damages is $100,000, but could be as much as $200,000. Leucothea has legal liability insurance coverage that limits their loss to $80,000. After the 2014 financial statements were issued, Leucothea agreed to settle the case for $125,000. What amount of accrued liability should Leucothea have reported in its December 31, 2014 balance sheet? The December 31, 2016 (pre-closing) adjusted trial balance for Sunshine Enterprises follows. Calculate the total current liabilities. Account Title Debits Credits Accounts payable 90,000 Accounts receivable Accumulated depreciation - equipment 1,70,000 2,60,000 Capital stock 4,90,000 Cash 26,000 Cost of goods sold 4,80,000 Depreciation expense 60,000 Equipment 7,00,000 Interest expense 4,000 Inventory 1,50,000 Note payable (due in six months) 60,000 Rent expense Retained earnings 30,000 62,000 Salaries and wages payable Sales revenue 8,000 7,70,000 Salaries expense 1,20,000 TOTALS 17,40,000 17,40,000
Question:67 During 2014, Leucothea Co. became involved in a legal dispute with a supplier. At December 31, 2014, Leucothea's legal advisor believed that an unfavorable outcome was probable. A reasonable estimate of resulting monetary damages is $100,000, but could be as much as $200,000. Leucothea has legal liability insurance coverage that limits their loss to $80,000. After the 2014 financial statements were issued, Leucothea agreed to settle the case for $125,000. What amount of accrued liability should Leucothea have reported in its December 31, 2014 balance sheet? The December 31, 2016 (pre-closing) adjusted trial balance for Sunshine Enterprises follows. Calculate the total current liabilities. Account Title Debits Credits Accounts payable 90,000 Accounts receivable Accumulated depreciation - equipment 1,70,000 2,60,000 Capital stock 4,90,000 Cash 26,000 Cost of goods sold 4,80,000 Depreciation expense 60,000 Equipment 7,00,000 Interest expense 4,000 Inventory 1,50,000 Note payable (due in six months) 60,000 Rent expense Retained earnings 30,000 62,000 Salaries and wages payable Sales revenue 8,000 7,70,000 Salaries expense 1,20,000 TOTALS 17,40,000 17,40,000
Chapter13: Comparative Forms Of Doing Business
Section: Chapter Questions
Problem 33P
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Transcribed Image Text:Question:67
During 2014, Leucothea Co. became involved in a legal
dispute with a supplier. At December 31, 2014,
Leucothea's legal advisor believed that an unfavorable
outcome was probable. A reasonable estimate of resulting
monetary damages is $100,000, but could be as much as
$200,000. Leucothea has legal liability insurance coverage
that limits their loss to $80,000. After the 2014 financial
statements were issued, Leucothea agreed to settle the
case for $125,000. What amount of accrued liability should
Leucothea have reported in its December 31, 2014 balance
sheet?
The December 31, 2016 (pre-closing) adjusted trial balance
for Sunshine Enterprises follows. Calculate the total current
liabilities.
Account Title
Debits
Credits
Accounts payable
90,000
Accounts receivable
Accumulated depreciation - equipment
1,70,000
2,60,000
Capital stock
4,90,000
Cash
26,000
Cost of goods sold
4,80,000
Depreciation expense
60,000
Equipment
7,00,000
Interest expense
4,000
Inventory
1,50,000
Note payable (due in six months)
60,000
Rent expense
Retained earnings
30,000
62,000
Salaries and wages payable
Sales revenue
8,000
7,70,000
Salaries expense
1,20,000
TOTALS
17,40,000 17,40,000
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