Sound audio manufactures and sells audio equipment for automobiles. engineers notified management in december 2018 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 $2 million. the fiscal year ends on december 31. required: 1. should this loss contingency be accrued & disclosed, only disclosed, or neither? 2. what loss, if any, should sound audio report in its 2018 income statement? 3. what liability, if any, should sound audio report in its 2018 balance sheet? 4. prepare any journal entry needed.

Suppose that xtel currently is selling at $40 per share. you buy 500 shares using $15,000 of your own money, borrowing the remainder of the purchase price from your broker. the rate on the margin loan is 8%. a. what is the percentage increase in the net worth of your brokerage account if the price of xtel immediately changes to (a) $44; (b) $40; (c) $36? (leave no cells blank - be certain to enter "0" wherever required. negative values should be indicated by a minus sign. round your answers to 2 decimal places.) b. if the maintenance margin is 25%, how low can xtel’s price fall before you get a margin call? (round your answer to 2 decimal places.) c. how would your answer to requirement 2 would change if you had financed the initial purchase with only $10,000 of your own money? (round your answer to 2 decimal places.) d. what is the rate of return on your margined position (assuming again that you invest $15,000 of your own money) if xtel is selling after one year at (a) $44; (b) $40; (c) $36? (negative values should be indicated by a minus sign. round your answers to 2 decimal places.) e. continue to assume that a year has passed. how low can xtel’s price fall before you get a margin call? (round your answer to 2 decimal places.)