Prepare Journal Entries, If Needed, for the Following Scenarios

question 124

Essay

Prepare journal entries, if needed, for the following scenarios:
1)Token Company is involved in a lawsuit with Bednam Industries for faulty parts. Token Company is not sure whether they need to journalize a transaction for the amount. Token Company's attorney has stated that it is probable that Token Company will lose the lawsuit and be expected to pay $2 million in damages.
2)Highlights Salon is involved in a lawsuit with Key Color. Highlights' attorney has stated that it is probable that Highlights will win $150,000.
3)Kepler Industries is involved in a lawsuit. Kepler Industries is expected to lose the lawsuit and pay $1.2 million. The probability of loss is very high.

Journalize proper adjusting entries for payroll and understand their impact on financial statements.

Understand the concept of vertical analysis and its application to income statements and balance sheets.

Recognize the effects on financial statements of omitted adjustments.

Classify items correctly as prepaid expenses, unearned revenues, accrued expenses, and accrued revenues.

---

Definitions:

Brainstorming

A form of creative thinking in groups, using a procedure in which all group members are encouraged to generate as many ideas as possible while interacting and stimulating each other

Brainstorming Tasks

Involves generating creative ideas and solutions within a group setting, without judgment or criticism during the initial phase.

Dominant Leader

An individual in a leadership position who exerts authority and control, often taking charge of decision-making processes.

Independent Contributions

Efforts or achievements made by individuals that stand on their own and contribute uniquely to a collective goal or project.