4th Edition

ISBN: 9781337690881

Author: Jay Rich, Jeff Jones

Publisher: Cengage Learning

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Textbook Question

Chapter 8, Problem 54BE

Contingent Liabilities

Many companies provide warranties with their products. Such warranties typically guarantee the repair or replacement of defective goods for some specified period of time following the sale.

Required:

CONCEPTUAL CONNECTION Why do most warranties require companies to make a journal entry to record a liability for future warranty costs?

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.

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Chapter 8, Problem 53BE

Chapter 8, Problem 55BE

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Chapter 8 Solutions

Cornerstones of Financial Accounting

Ch. 8 - Prob. 1DQ Ch. 8 - Prob. 2DQ Ch. 8 - Prob. 3DQ Ch. 8 - Prob. 4DQ Ch. 8 - Prob. 5DQ Ch. 8 - Prob. 6DQ Ch. 8 - Prob. 7DQ Ch. 8 - Prob. 8DQ Ch. 8 - Prob. 9DQ Ch. 8 - Prob. 10DQ

Ch. 8 - Prob. 11DQ Ch. 8 - Prob. 12DQ Ch. 8 - Prob. 13DQ Ch. 8 - Prob. 14DQ Ch. 8 - Prob. 15DQ Ch. 8 - Prob. 16DQ Ch. 8 - Prob. 17DQ Ch. 8 - Prob. 18DQ Ch. 8 - Prob. 19DQ Ch. 8 - Prob. 20DQ Ch. 8 - Prob. 1MCQ Ch. 8 - Prob. 2MCQ Ch. 8 - Prob. 3MCQ Ch. 8 - Refer to the information for Kinsella Seed above....Ch. 8 - Prob. 5MCQ Ch. 8 - Prob. 6MCQ Ch. 8 - Prob. 7MCQ Ch. 8 - Prob. 8MCQ Ch. 8 - Prob. 9MCQ Ch. 8 - When a credit is made to federal income taxes...Ch. 8 - Prob. 11MCQ Ch. 8 - Prob. 12MCQ Ch. 8 - Prob. 13MCQ Ch. 8 - Prob. 14MCQ Ch. 8 - Prob. 15MCQ Ch. 8 - Prob. 16MCQ Ch. 8 - Prob. 17MCQ Ch. 8 - Which of the following transactions would cause...Ch. 8 - Issuing Notes Payable On June 30, Carmean Inc....Ch. 8 - Notes Payable Rogers Machinery Company borrowed...Ch. 8 - Prob. 21CE Ch. 8 - Accrued Interest On March 1, the Garner...Ch. 8 - Prob. 23CE Ch. 8 - Prob. 24CE Ch. 8 - Sales Tax Cobb Baseball Bats sold 45 bats for $50...Ch. 8 - Payroll Taxes Hernandez Builders has a gross...Ch. 8 - Prob. 27CE Ch. 8 - Prob. 28CE Ch. 8 - Unearned Sales Revenue Brand Landscaping offers a...Ch. 8 - Prob. 30CE Ch. 8 - Prob. 31CE Ch. 8 - Prob. 32CE Ch. 8 - Liquidity Ratios NWAs financial statements contain...Ch. 8 - Prob. 34CE Ch. 8 - Accounts Payable On May 18, Stanton Electronics...Ch. 8 - Accounts and Notes Payable On February 15, Barbour...Ch. 8 - Issuing Notes Payable On September 30, Bello...Ch. 8 - Notes Payable Renchen Company, which manufactures...Ch. 8 - Accrued Interest On July 1, Brimley Company issued...Ch. 8 - Accrued Interest On May 1, the Garnett Corporation...Ch. 8 - Accrued Property Taxes Annual property taxes...Ch. 8 - Accrued Income Taxes Nolan Inc. had taxable income...Ch. 8 - Prob. 43BE Ch. 8 - Accrued Wages A company employs a part-time staff...Ch. 8 - Prob. 45BE Ch. 8 - Prob. 46BE Ch. 8 - Prob. 47BE Ch. 8 - Prob. 48BE Ch. 8 - Payroll Taxes Sids Grocery Store has 100 employees...Ch. 8 - Prob. 50BE Ch. 8 - Payroll Taxes Its the Tooth Dental works to...Ch. 8 - Unearned Sales Revenue Curtiss Carpet Cleaning...Ch. 8 - Unearned Rent Revenue Mannion Property Management...Ch. 8 - Contingent Liabilities Many companies provide...Ch. 8 - Prob. 55BE Ch. 8 - Prob. 56BE Ch. 8 - Prob. 57BE Ch. 8 - Liquidity Ratios JRLs financial statements contain...Ch. 8 - Prob. 59BE Ch. 8 - Prob. 60E Ch. 8 - Recording Various Liabilities Glenview Hardware...Ch. 8 - Recording Various Liabilities Plymouth Electronics...Ch. 8 - Reporting Liabilities Morton Electronics had the...Ch. 8 - Accounts Payable Sleek Ride, a company providing...Ch. 8 - Accrued Liabilities Charger Inc. had the following...Ch. 8 - Accrued Liabilities Thornwood Tile had the...Ch. 8 - Prob. 67E Ch. 8 - Payroll Accounting and Discussion of Labor Costs...Ch. 8 - Unearned Revenue Jennifers Landscaping Services...Ch. 8 - Prob. 70E Ch. 8 - Warranties Eds Athletics sells bicycles and other...Ch. 8 - Ratio Analysis Intel Corporation provided the...Ch. 8 - Payable Transactions Richmond Company engaged in...Ch. 8 - Payroll Accounting Jet Enterprises has the...Ch. 8 - Note Payable and Accrued Interest Fairbome Company...Ch. 8 - Prob. 76APSA Ch. 8 - Prob. 77APSA Ch. 8 - Prob. 78APSA Ch. 8 - Prob. 79APSA Ch. 8 - Ratio Analysis Consider the following information...Ch. 8 - Payable Transactions Daniels Company engaged in...Ch. 8 - Payroll Accounting McLaughlin Manufacturing has...Ch. 8 - Note Payable and Accrued Interest Ellsworth...Ch. 8 - Prob. 76BPSB Ch. 8 - Prob. 77BPSB Ch. 8 - Prob. 78BPSB Ch. 8 - Prob. 79BPSB Ch. 8 - Ratio Analysis Consider the following information...Ch. 8 - Prob. 81.1C Ch. 8 - Prob. 81.2C Ch. 8 - Prob. 81.3C Ch. 8 - Prob. 82.1C Ch. 8 - Prob. 82.2C Ch. 8 - Prob. 82.3C Ch. 8 - Prob. 83.1C Ch. 8 - Prob. 83.2C Ch. 8 - Prob. 83.3C Ch. 8 - Prob. 83.4C Ch. 8 - Prob. 83.5C Ch. 8 - Prob. 83.6C Ch. 8 - Prob. 83.7C Ch. 8 - Prob. 83.8C Ch. 8 - Prob. 83.9C Ch. 8 - Prob. 84.1C Ch. 8 - Prob. 84.2C Ch. 8 - Prob. 84.3C Ch. 8 - Prob. 84.4C Ch. 8 - Prob. 84.5C Ch. 8 - Comparative Analysis: Under Armour, Inc., versus...Ch. 8 - Prob. 84.7C Ch. 8 - Prob. 84.8C Ch. 8 - Prob. 85.1C Ch. 8 - Prob. 85.2C Ch. 8 - Prob. 85.3C

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Solution Summary: The author explains that the warranty liability is contingent liability that is probable and its reasonable amount can be estimated.

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