Journal Entries: Entries to record the financial transactions during each accounting period are called journal entries. Income, liabilities and the giver are credited if the balance is increased and debited if the balance is reduced Expenses, assets and the receiver are debited if the balance is increased and credited if the balance is reduced in a journal entry . Warranty Liability: Contingent liability due to defect in the products of the company is called warranty liability. Estimated on historical basis, it is recorded in the company’s books. To prepare: The journal entries to record the estimated warranty liability and warranty cost:

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Answer 1

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Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 11, Problem 11.5E

(a)

To determine

Journal Entries: Entries to record the financial transactions during each accounting period are called journal entries. Income, liabilities and the giver are credited if the balance is increased and debited if the balance is reduced Expenses, assets and the receiver are debited if the balance is increased and credited if the balance is reduced in a journal entry.

Warranty Liability: Contingent liability due to defect in the products of the company is called warranty liability. Estimated on historical basis, it is recorded in the company’s books.

To prepare: The journal entries to record the estimated warranty liability and warranty cost:

(b)

To determine

The estimated warranty liability at December 31.

(c).

To determine

To prepare: The entry to record warranty cost incurred in January.

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Answer 2

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 11, Problem 11.5E

(a)

To determine

Journal Entries: Entries to record the financial transactions during each accounting period are called journal entries. Income, liabilities and the giver are credited if the balance is increased and debited if the balance is reduced Expenses, assets and the receiver are debited if the balance is increased and credited if the balance is reduced in a journal entry.

Warranty Liability: Contingent liability due to defect in the products of the company is called warranty liability. Estimated on historical basis, it is recorded in the company’s books.

To prepare: The journal entries to record the estimated warranty liability and warranty cost:

(b)

To determine

The estimated warranty liability at December 31.

(c).

To determine

To prepare: The entry to record warranty cost incurred in January.

Expert Solution & Answer

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Answer 3

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 11, Problem 11.5E

(a)

To determine

Journal Entries: Entries to record the financial transactions during each accounting period are called journal entries. Income, liabilities and the giver are credited if the balance is increased and debited if the balance is reduced Expenses, assets and the receiver are debited if the balance is increased and credited if the balance is reduced in a journal entry.

Warranty Liability: Contingent liability due to defect in the products of the company is called warranty liability. Estimated on historical basis, it is recorded in the company’s books.

To prepare: The journal entries to record the estimated warranty liability and warranty cost:

(b)

To determine

The estimated warranty liability at December 31.

(c).

To determine

To prepare: The entry to record warranty cost incurred in January.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 11, Problem 11.5E

(a)

To determine