Question

Requirement 1. Journalize required​ transactions, if​ any, in Bowes​'s general journal. Explanations are not required. ​(Record debits​ first, then credits. Exclude explanations from journal entries. For transactions that do not require an​ entry, make sure to select​ "No entry​ required" in the first cell in the​ "Accounts" column and leave all other cells​ blank.)
Apr.​ 30: Bowes is party to a patent infringement lawsuit of $ 230,000. Bowes​'s attorney is certain it is remote that Bowes will lose this lawsuit.
Answer
estimated warranty expense at 2​% of sales of $ 390,000.
journalize
Answer
Sep.​ 30: Bowes is party to a lawsuit for copyright violation of $ 110,000. Bowes​'s attorney advises that it is probable Bowes will lose this lawsuit. The attorney estimates the loss at $ 110,000.

journalize
Answer
Dec. ​31: Bowes estimated warranty expense on sales for the second half of the year of $ 540, 000 at 2​%.

journalize
Answer
What is the balance in Estimated Warranty Payable assuming a beginning balance of​ $0?
Use the​ T-account to determine the ending balance for the Estimated Warranty Payable account. Use a​ "Bal." posting reference to show the ending balance of the account.
Answered by GPT-4o mini
Here are the journal entries for the transaction described:

| Date | Accounts | Debit | Credit |
|------------|-------------------------------|-------------|-------------|
| Apr. 30 | No entry required | | |

Since the attorney believes it is remote that Bowes will lose the lawsuit, no journal entry is required.
Answered by GPT-4o mini
To record the estimated warranty expense, which is 2% of sales totaling $390,000, you would calculate the warranty expense as follows:

Estimated Warranty Expense = Sales × Warranty Rate
Estimated Warranty Expense = $390,000 × 2% = $7,800

Here is the journal entry:

| Date | Accounts | Debit | Credit |
|------------|------------------------------|------------|-------------|
| [Date] | Warranty Expense | $7,800 | |
| | Estimated Warranty Liability | | $7,800 |

Replace "[Date]" with the actual date of the journal entry.
Answered by GPT-4o mini
Since Bowes' attorney advises that it is probable that Bowes will lose the lawsuit and estimates the loss to be $110,000, a journal entry is required to record the estimated loss.

Here is the journal entry:

| Date | Accounts | Debit | Credit |
|------------|-------------------------------|------------|-------------|
| Sep. 30 | Lawsuit Loss Expense | $110,000 | |
| | Litigation Liability | | $110,000 |

This entry reflects the recognition of the liability for the estimated loss from the lawsuit.
Answered by GPT-4o mini
To record the estimated warranty expense for the second half of the year based on sales of $540,000 at a warranty rate of 2%, you would first calculate the warranty expense:

Estimated Warranty Expense = Sales × Warranty Rate
Estimated Warranty Expense = $540,000 × 2% = $10,800

Here is the journal entry:

| Date | Accounts | Debit | Credit |
|------------|-------------------------------|------------|-------------|
| Dec. 31 | Warranty Expense | $10,800 | |
| | Estimated Warranty Liability | | $10,800 |

This entry reflects the recognition of the estimated warranty expense related to sales in the second half of the year.
Answered by GPT-4o mini
To determine the balance in the Estimated Warranty Payable account using a T-account, we will account for the warranty expense recorded throughout the year. Based on your previous entries, we had two warranty expenses recorded:

1. **For sales of $390,000:**
- Estimated Warranty Expense: $7,800
- Estimated Warranty Payable increase: $7,800

2. **For sales of $540,000:**
- Estimated Warranty Expense: $10,800
- Estimated Warranty Payable increase: $10,800

Now we can summarize this in a T-account.

### T-account for Estimated Warranty Payable

```plaintext
Estimated Warranty Payable
------------------------------------------------
| Date | Debit | Credit |
------------------------------------------------
| | | $7,800 (from |
| | | Dec. 31 entry) |
| | | $10,800 (from |
| | | Sep. 30 entry) |
------------------------------------------------
| | | |
| | | Bal. $18,600 |
------------------------------------------------
```

### Balance Calculation:
- Total Credits (Warranty Expense recognized):
- $7,800 + $10,800 = $18,600

Since there are no debits to this account (i.e., no warranty claims have been made yet), the ending balance for Estimated Warranty Payable is **$18,600**.

So, the ending balance in the Estimated Warranty Payable account is **$18,600** with a Bal. entry below.