Identify whether the situation represents a contingent liability .

Question

MOH Cost: Top Dog Company has a budget with sales of 7,500 units and $3,400,000. Variable costs are budgeted at $1,850,000, and fixed overhead is budgeted at $970,000. What is the budgeted manufacturing cost per unit?

Answer 1

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 8, Problem 13E

1

To determine

Identify whether the situation represents a contingent liability.

2

To determine

Record the warranty expense and warranty liability for the month of December based on 6% of sales.

3.

To determine

Record the payment of the actual warranty expenditures of $13,000 in January.

4.

To determine

Identify the balance in the warranty liability account.

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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 8, Problem 13E

1

To determine

Identify whether the situation represents a contingent liability.

2

To determine

Record the warranty expense and warranty liability for the month of December based on 6% of sales.

3.

To determine

Record the payment of the actual warranty expenditures of $13,000 in January.

4.

To determine

Identify the balance in the warranty liability account.

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 8, Problem 13E

1

To determine

Identify whether the situation represents a contingent liability.

2

To determine

Record the warranty expense and warranty liability for the month of December based on 6% of sales.

3.

To determine

Record the payment of the actual warranty expenditures of $13,000 in January.

4.

To determine

Identify the balance in the warranty liability account.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook 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 8, Problem 13E

1

To determine