[The following information applies to the questions displayed below. Great Adventures is a defendant in litigation involving a biking accident during one of its adventure races. The front tire on one of the bikes came off during the race, resulting in serious injury to the rider. However, Great Adventures can document that each bike was carefully inspected prior to the race. It may have been that the rider loosened the wheel during the race and then forgot to tighten the quick-release mechanism For each of the following scenarios, record the necessary entry. (In cases where no entry is required, please select the option \"No journal entry required\" for your answer to grade correctly. Leave no cells blank -be certain to enter \"O\" wherever required. Omit the \"$\" sign in your response.) Solution Answer 1) 2) 3) No Journal Entry Disclosed in notes to account 4) No Journal Entry Notes : There are three situation for contingent liabilities, all involving different accounting treatments. They are:General journalDebitCreditLegal Expenses139000Accrued Liability139000.

1. [The following information applies to the questions displayed below., Henna Co. produces and
sells two products, T and O. It manufactures these products in separate factories and markets
them through different channels. They have no shared costs. This year, the company sold 55,000
units of each product. Sales and costs for each product follow Product T Product O $907,500
$907,500 90,750 Sales Variable costs 726,000 Contribution margin Fixed costs 181,500 36,500
816,750 671,750 Income before taxes Income taxes (30% rate) 145,000 43,500 145,000 43,500
Net income $ 101,500 101,500
Solution
HENNA Co.
Forecasted Contribution Margin Income Statement
Product T
Product O
Total
Units
$ Per Unit
Total
$ Per Unit
Total
Sales
69,000
$ 16.50
$ 1,138,500.00
$ 16.50
$ 1,138,500.00
$ 2,277,000.00
(907500/55000)
(907500/55000)
Less: Variable Costs
69,000
$ 13.20
$ 910,800.00
$ 1.65
$ 113,850.00
$ 1,024,650.00

2. (726000/55000)
(90750/55000)
Contribution Margin
69,000
$ 3.30
$ 227,700.00
$ 14.85
$ 1,024,650.00
$ 1,252,350.00
Less: Fixed Costs
$ 36,500.00
$ 671,750.00
$ 708,250.00
Income Before taxes
$ 191,200.00
$ 352,900.00
$ 544,100.00
Less: Income Taxes (30%)
$ 57,360.00
$ 105,870.00
$ 163,230.00
Net Income
$ 133,840.00
$ 247,030.00
$ 380,870.00
HENNA Co.
Forecasted Contribution Margin Income Statement
Product T
Product O
Total
Units
$ Per Unit
Total
$ Per Unit
Total
Sales

3. 69,000
$ 16.50
$ 1,138,500.00
$ 16.50
$ 1,138,500.00
$ 2,277,000.00
(907500/55000)
(907500/55000)
Less: Variable Costs
69,000
$ 13.20
$ 910,800.00
$ 1.65
$ 113,850.00
$ 1,024,650.00
(726000/55000)
(90750/55000)
Contribution Margin
69,000
$ 3.30
$ 227,700.00
$ 14.85
$ 1,024,650.00
$ 1,252,350.00
Less: Fixed Costs
$ 36,500.00
$ 671,750.00
$ 708,250.00
Income Before taxes
$ 191,200.00
$ 352,900.00
$ 544,100.00
Less: Income Taxes (30%)
$ 57,360.00
$ 105,870.00
$ 163,230.00

4. Net Income
$ 133,840.00
$ 247,030.00
$ 380,870.00