In your third week at the Marshall Corporation, you attend a day long company planning session. During this meeting you learned about many initiatives and situations which need to be considered when preparing for the upcoming year end at December 31, 2014. It appears to you that Mr. Marshall is depending on you to leverage your education to provide guidance on the following independent situations:
Lawsuit for $2,000,000 for an injury caused to a customer allegedly as a result of product use. The suit was filed in March of 2012. The Marshall corporate lawyer feels that it is probable Marshall will not win the suit and currently estimates a judgment against Marshall Corporation between $300,000 and $800,000 with a most likely judgment of $500,000 based on historical similar cases.
The company is going to be issuing $100,000 bonds at a price of $97,158.54. During the meeting when you were made aware of this is was clear Mr. Marshall is not experienced with amortization schedules and processes for preparation.
The new product line includes a $3 off coupon will appear in several magazine advertisements nationally from December 2014 – January 2015 to encourage consumers to try the new product. It is expected that 10,000 coupons will be redeemed during January and February 2014.
A sick leave and vacation policy is being rolled out. Each of the 5 employees will be awarded 9 days leave per year with employees being allowed to take the vacation after they have been there one year. Daily gross wages for the employees is $200 per week.
Deliverable:
From a financial reporting and ethical stand point, prepare a written memo, single spaced to Mr. Marshall which includes recommendations on how to account for the items above. The memo should include each of the following considerations.