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Sound Audio manufactures and sells audio equipment for automobiles Engineers notified management in December 2021 of a circuit flaw in an amplifier that poses a potential fire hazard. An intense investigation indicated that a product recall is virtually certain, estimated to cost the company $70 million. The fiscal year ends on December 31 Required: 1. Should this loss contingency be accrued, only disclosed, or neither? 2. What loss, if any, should Sound Audio report in its 2021 income statement? 3. What liability, if any, should Sound Audio report in its 2021 balance sheet? 4. Prepare any journal entry needed Complete this question by entering your answers in the tabs below. Reg 1 to 3 Reg 4 Should this loss contingency be accrued, only disclosed, or neither? What loss and liability, if any, should Sound Audio report in its 2021 income statement and balance sheet respectively? (Enter your answers in millions rounded to 1 decimal place (.e., 5,500,000 should be entered as 5.5).) 1. Loss contingency Req 1 to 3 Reg 4 Should this loss contingency be accrued, only disclosed, or neither? What loss and liability, if any, should Sound Audio repo its 2021 income statement and balance sheet respectively? (Enter your answers in millions rounded to 1 decimal place (i.e 5,500,000 should be entered as 5.5).) 1. 2. Loss contingency Loss Liability Accrued & disclosed $ 70.0 % million $ 70.0 million rch 2. VALIUSS, Holly. Slud Juu RUCO TEMUI 105 ZUZCO Seteller 3. What liability, if any, should Sound Audio report in its 2021 balance sheet? 4. Prepare any journal entry needed. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Reg 1 to 3 Reg 4 Prepare any journal entry needed. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Enter your answers in millions rounded to 1 decimal place i.e., 5,500,000 should be entered as 5.5).) No Transaction Debit Credit General Journal Loss product recall Liability product recall 70,000,000.0% 70.0 % Reg 1 to 3 Reen

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