SusanQ
Nov 15, 2010, 11:23 PM
I need to know what the journal entry was for a settlement of free repairs in a class lawsuit, by looking at the income statement.
What the settlement provides: In addition to free repairs, the Settlement Agreement makes available three categories of benefits to Class Members. The 1st is Repair Reimbursement; the 2nd is Replacement Cost; and the 3rd is Purchase Certificates.
Problem: Refer 2 company's income statement for fiscal 2004. What journal entry did company record to account for the front-load washer settlement during 2004?
Above Operating Income in Inc. statement is "Front-load washer litigation" yr ended amount of $33,500. Below Operating Income is "Adverse judgement on pre-acquisition distributor lawsuit" yr ended amount of $(10,505). This is the all I see related to settlement.
I don't know what is to be debited or credited and for what amount. Obviously, the numbers don't match up, but the question doesn't say the amount settled.
Help please!
What the settlement provides: In addition to free repairs, the Settlement Agreement makes available three categories of benefits to Class Members. The 1st is Repair Reimbursement; the 2nd is Replacement Cost; and the 3rd is Purchase Certificates.
Problem: Refer 2 company's income statement for fiscal 2004. What journal entry did company record to account for the front-load washer settlement during 2004?
Above Operating Income in Inc. statement is "Front-load washer litigation" yr ended amount of $33,500. Below Operating Income is "Adverse judgement on pre-acquisition distributor lawsuit" yr ended amount of $(10,505). This is the all I see related to settlement.
I don't know what is to be debited or credited and for what amount. Obviously, the numbers don't match up, but the question doesn't say the amount settled.
Help please!