Sun Energy Co. Unadjusted Trial Balance Year Ended December 31, 2017 Account Debit Credit Cash $7,000 Accounts Receivable 3,100 Merchandise Inventory 4,500 Buildings 2,400 Equipment 4,200 Accounts Payable $4,700 Salaries Payable 3,000 Common Stock 2,500 Dividends Sales Revenue 17,800 COGS 3,800 Salaries Expense 3,000 Totals $28,000 $28,000 You are also given the following supplemental information: • A pending lawsuit, claiming $2,500 in damages, is considered likely to favor the plaintiff and can be reasonably estimated. Sun Energy Co. believes a customer may win a lawsuit for $3,500 in damages, but the outcome is only reasonably possible to occur. Sun Energy calculated warranty expense estimates of $210. A. Using the unadjusted trial balance and supplemental information for Sun Energy Co., construct an income statement for the year ended December 31, 2017. Pay particular attention to expenses resulting from contingencies. Sun Energy Co. Income Statement Year Ended December 31, 2017 Revenues: Total Revenues Expenses:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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B. Construct a balance sheet, for December 31, 2017, from
the given unadjusted trial balance, supplemental
information, and income statement for Sun Energy Co.,
paying particular attention to contingent liabilities.
Sun Energy Co.
Balance Sheet
December 31, 2017
Assets
Total Assets
$
Liabilities
$
Total Liabilities
$
Stockholders' Equity
Total Liabilities and Stockholders' Equity
C. Sun Energy Co. is the defendant in a pending
lawsuit, The plaintiff is claiming $2,500 in damages and is
considered likely to win this amount when the case is tried.
In addition, Sun Energy Co. believes another customer may
win a different lawsuit for $3,500 in damages, but this
outcome is only possible, not likely, to occur. Also, Sun
Energy Co. has calculated a warranty expense estimate of
$210. How much should be included as liabilities and
expenses with respect to these items on ABC's current
financial statements?
Transcribed Image Text:B. Construct a balance sheet, for December 31, 2017, from the given unadjusted trial balance, supplemental information, and income statement for Sun Energy Co., paying particular attention to contingent liabilities. Sun Energy Co. Balance Sheet December 31, 2017 Assets Total Assets $ Liabilities $ Total Liabilities $ Stockholders' Equity Total Liabilities and Stockholders' Equity C. Sun Energy Co. is the defendant in a pending lawsuit, The plaintiff is claiming $2,500 in damages and is considered likely to win this amount when the case is tried. In addition, Sun Energy Co. believes another customer may win a different lawsuit for $3,500 in damages, but this outcome is only possible, not likely, to occur. Also, Sun Energy Co. has calculated a warranty expense estimate of $210. How much should be included as liabilities and expenses with respect to these items on ABC's current financial statements?
Sun Energy Co.
Unadjusted Trial Balance
Year Ended December 31, 2017
Account
Debit
Credit
Cash
$7,000
Accounts Receivable
3,100
Merchandise Inventory
4,500
Buildings
2,400
Equipment
4,200
Accounts Payable
$4,700
Salaries Payable
3,000
Common Stock
2,500
Dividends
Sales Revenue
17,800
COGS
3,800
Salaries Expense
3,000
Totals
$28,000
$28,000
You are also given the following supplemental information:
• A pending lawsuit, claiming $2,500 in damages, is considered likely to favor the plaintiff
and can be reasonably estimated. Sun Energy Co. believes a customer may win a lawsuit for
$3,500 in damages, but the outcome is only reasonably possible to occur. Sun Energy
calculated warranty expense estimates of $210.
A. Using the unadjusted trial balance and supplemental
information for Sun Energy Co., construct an income
statement for the year ended December 31, 2017. Pay
particular attention to expenses resulting from
contingencies.
Sun Energy Co.
Income Statement
Year Ended December 31, 2017
Revenues:
Total Revenues
Expenses:
Total Expenses
Transcribed Image Text:Sun Energy Co. Unadjusted Trial Balance Year Ended December 31, 2017 Account Debit Credit Cash $7,000 Accounts Receivable 3,100 Merchandise Inventory 4,500 Buildings 2,400 Equipment 4,200 Accounts Payable $4,700 Salaries Payable 3,000 Common Stock 2,500 Dividends Sales Revenue 17,800 COGS 3,800 Salaries Expense 3,000 Totals $28,000 $28,000 You are also given the following supplemental information: • A pending lawsuit, claiming $2,500 in damages, is considered likely to favor the plaintiff and can be reasonably estimated. Sun Energy Co. believes a customer may win a lawsuit for $3,500 in damages, but the outcome is only reasonably possible to occur. Sun Energy calculated warranty expense estimates of $210. A. Using the unadjusted trial balance and supplemental information for Sun Energy Co., construct an income statement for the year ended December 31, 2017. Pay particular attention to expenses resulting from contingencies. Sun Energy Co. Income Statement Year Ended December 31, 2017 Revenues: Total Revenues Expenses: Total Expenses
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