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Req 1 to 3 Req 4 Prepare any journal entry needed. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (1.e., 10,000,000 should be entered as 10).) No Event 1 Loss product recall General Journal Liability product recall < Req 1 to 3 Reg 4 Debit 2,000,000 Credit 2,000,000

Req 1 to 3 Req 4 Prepare any journal entry needed. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (1.e., 10,000,000 should be entered as 10).) No Event 1 Loss product recall General Journal Liability product recall < Req 1 to 3 Reg 4 Debit 2,000,000 Credit 2,000,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Req 1 to 3 1. 2. 3. Should this loss contingency be accrued & disclosed, only disclosed, or neither? What loss and Audio report in its 2021 income statement and balance sheet respectively? (Enter your answer should be entered as 10).) Req 1 to 3 No 1 Req 4 Loss contingency Loss Liability Req 4 O Show Transcribed Text Accrued & disclosed 2 million 2 million Event 1 $ $ G Prepare any journal entry needed. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (1.e., 10,000,000 should be entered as 10).) General Journal Reg 1 to 3 Loss product recall Liability product recall < Req 1 to 3 С Req 4 > Reg 4 > Debit 2,000,000 Credit 2,000,000
Transcribed Image Text:Req 1 to 3 1. 2. 3. Should this loss contingency be accrued & disclosed, only disclosed, or neither? What loss and Audio report in its 2021 income statement and balance sheet respectively? (Enter your answer should be entered as 10).) Req 1 to 3 No 1 Req 4 Loss contingency Loss Liability Req 4 O Show Transcribed Text Accrued & disclosed 2 million 2 million Event 1 $ $ G Prepare any journal entry needed. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions (1.e., 10,000,000 should be entered as 10).) General Journal Reg 1 to 3 Loss product recall Liability product recall < Req 1 to 3 С Req 4 > Reg 4 > Debit 2,000,000 Credit 2,000,000
Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December 2021 of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually certain, estimated to cost the company $2 million. The fiscal year ends on December 31. Required: 1. Should this loss contingency be accrued & disclosed, only disclosed, or neither? 2. What loss, if any, should Sound Audio report in its 2021 income statement? 3. What liability, if any, should Sound Audio report in its 2021 balance sheet? 4. Prepare any journal entry needed. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below.
Transcribed Image Text:Sound Audio manufactures and sells audio equipment for automobiles. Engineers notified management in December 2021 of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually certain, estimated to cost the company $2 million. The fiscal year ends on December 31. Required: 1. Should this loss contingency be accrued & disclosed, only disclosed, or neither? 2. What loss, if any, should Sound Audio report in its 2021 income statement? 3. What liability, if any, should Sound Audio report in its 2021 balance sheet? 4. Prepare any journal entry needed. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below.
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