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.)

Question

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 1

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.

Answer 2

estimated warranty expense at 2​% of sales of $ 390,000.
journalize

Answer 3

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.

Answer 4

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 5

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.

Answer 6

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

journalize

Answer 7

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.

Answer 8

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.

Answer 9

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

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.