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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)