had $ 300,000 of liabilities . The fair value of May ' s assets when acquired were as follows :
6 . ( TCO D ) Which of the following is a condition for accruing a liability for the cost of compensation for future absences ? ( Points : 5 )
7 . ( TCO D ) Which of the following taxes does not represent a payroll deduction a company may incur ? ( Points : 5 )
8 . ( TCO D ) Assume that a manufacturing corporation has ( 1 ) good quality control , ( 2 ) a one-year operating cycle , ( 3 ) a relatively stable pattern of annual sales , and ( 4 ) a continuing policy of guaranteeing new products against defects for three years that has resulted in material but rather stable warranty repair and replacement costs . Any liability for the warranty ( Points : 5 )
9 . ( TCO D ) Jenkins Corporation has $ 2,500,000 of short-term debt it expects to retire with proceeds from the sale of 75,000 shares of common stock . If the stock is sold for $ 20 per share subsequent to the balance sheet date , but before the balance sheet is issued , what amount of short-term debt could be excluded from current liabilities ? ( Points : 5 )
10 . ( TCO D ) Tender Foot Inc . is involved in litigation regarding a faulty product sold in a prior year . The company has consulted with its attorney and determined that it is possible that they may lose the case . The attorneys estimated that there is a 40 % chance of losing . If this is the case , their attorney estimated that the amount of any payment would be $ 500,000 . What is the required journal entry as a result of this litigation ? ( Points : 5 )