Reference no: EM132710566

Questions -

Q1. On February 5, 2020, an employee filed a $1,000,000 lawsuit against Steel Company for damages suffered when one of Steel's plant exploded on December 9, 2019. The legal counsel believed the entity would probably lose the lawsuit and estimated the loss to be $250,000. The employee offered to settle the lawsuit out of court for $450,000 but the entity did not agree to the settlement. On December 31, 2019, what amount should be reported as liability from lawsuit?

Q2. Terry Co. offered a contest in which the winner would receive $500,000 payable over twenty years. On December 31, 2019, Jason Company announced the winner of the contest and signed a note payable to the winner for $500,000 payable in $25,000 installments every January 31. On December 31, 2019, Terry Co. purchased an annuity for $209,125 to provide the $475,000 prize remaining after the first $25,000 installment which was paid on January 31, 2020. On December 31, 2019, what amount should be reported as note payable-contest winner, net of current portion?

Q3. Included in Meat Corporation's liability account balances at December 31, 20x6 was a Note payable for $1,400,000. The principal amount of the note payable is $1,400,000 and bears interest at 15%. The note is dated April 1, 20x6 and is payable in four equal installments of $350,000 beginning April 1, 20x7. The first principal and interest payment was made on April 1, 20x7. Determine the non-current portion of the note payable as of December 31, 20x7.

Q4. One Company sells 500 laptop computers in 20X9 for $100 each. Each one has a one-year warranty. It is estimated that the warranty cost for each computer will be $10 for each computer. In 20X9, the company actually incurs warranty cost of $1,000. What is the warranty expense for 20x9?