Question

Great Adventures Problem AP8-1 (GL) At the end of 2022, the following information is available for Great Adventures. • Additional interest for five months needs to be accrued on the $31,000, 6% loan obtained on August 1, 2021. Recall that annual interest is paid each July 31. • Assume that $11,000 of the $31,000 loan discussed above is due next year. • By the end of the year, $20,000 in gift cards have been redeemed. The company had sold gift cards of $26,000 during the year and recorded those as Deferred Revenue. • Great Adventures is a defendant in litigation involving a biking accident during one of its adventure races. The company believes the likelihood of payment occurring is probable, and the estimated amount to be paid is $13,000. • For sales of MU watches, Great Adventures offers a warranty against defect for one year. At the end of the year, the company estimates future warranty costs to be $5,000. & Answer is not complete. Requirement General Journal General Ledger Trial Balance Income Statement Balance Sheet Prepare the journal entries for transactions. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

Just need the Journal entires for each.

Answer 1

Date	Account title	Debit	credit
1	Interest expense	775
	Interest payable		775
	[Being interest accrued for 5 months (1Aug-31Dec) :31000*.06*5/12]
2	No Journal entry .
3	Deferred revenue	20000
	Gift card revenue		20000
4	Loss from Lawsuit	13000
	Litigation liability		13000
5	Warranty expense	5000
	warranty liability		5000

working :

2)Only classification of liability will be changed for $ 11000 (as current liability) from non current liability.

Long term liability = 31000-11000 = 20000

4)Since it is probable that company will lose and amount can be estimated ,entry for contingent liability is required for same.