Compact Electronics is a leading manufacturer of digital

camera equipment
Compact Electronics is a leading manufacturer of digital camera equipment. Assume the
following transactions occur during the year ended December 31, 2012.Required:Record any
amounts as a result of each of these contingencies.1. Sales were $28 million (all credit) for
2012. Although no customer accounts have been shown to be uncollectible, the company
estimates that 2% of credit sales will eventually prove uncollectible.2. Compact Electronics is
the plaintiff in a $4 million lawsuit filed against a supplier.The suit is in final appeal, and
attorneys advise it is virtually certain that Compact Electronics will win and be awarded $2.5
million.3. In November 2012, Compact Electronics became aware of a design flaw in one of its
digital camera models. A product recall appears probable and would likely cost the company
$500,000.4. Compact Electronics is the defendant in a patent infringement lawsuit brought by a
competitor. It appears reasonably likely Compact Electronics will lose the case, and potential
losses are estimated to be in the range of $1.5 to $2.5 million.View Solution: Compact
Electronics is a leading manufacturer of digital camera equipment
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