Reference no: EM132951775

Question - Compact Electronics is a leading manufacturer of digital camera equipment. Assume the following transactions occur during the year ended December 31, 2021.

-Accounts receivable were $27.4 million (all credit) at the end of 2021. Although no specific customer accounts have been shown to be uncollectible, the company estimates that 3% of accounts receivable will eventually prove uncollectible.

-Compact Electronics is the plaintiff in a $3.4 million lawsuit filed against a supplier. The suit is in final appeal, and attorneys advise it is virtually certain that Compact Electronics will win and be awarded $1.9 million.

-In November 2021, Compact Electronics became aware of a design flaw in one of its digital camera models. A product recall appears probable and would likely cost the company $440,000.

-Compact Electronics is the defendant in a patent infringement lawsuit brought by a competitor. It appears reasonably likely Compact Electronics will lose the case, and potential losses are estimated to be in the range of $0.9 to $1.9 million.Required:

Record any amounts as a result of each of these contingencies. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $5.5 million should be entered as 5,500,000.)

Make Journal entry worksheet

1. Record the estimated uncollectible accounts.

2. Record the contingent gain if needed.

3. Record the contingent liability if needed.

4. Record the contingent liability if needed.