Randall Go-Karts sells motorized go-karts. Randall Go-Karts are motorized and are typically purchased by amusement parks and other recreation facilities, but are also occasionally purchased by individuals for their own personal use. The company uses a perpetual inventory system. Selected transactions in the month of December follow:

Requirement: Describe how each of the contingent liabilities in the selected December transactions would be treated in Tripp's financial statements for 2022.

a. Dec 22 transaction will be footnoted as a contingent liability.
b. Dec 22 transaction will not be footnoted because it is unlikely to be a loss.
c. Dec 31 transaction will be reported as a liability on the balance sheet and an expense on the income statement. Transaction will also be footnoted.
d. Dec 5 transaction will be reported as a liability on the balance sheet and an expense on the income statement. Transaction will also be footnoted.
e. Dec 27 transaction will be reported as a liability on the balance sheet and an expense on the income statement. Transaction will not be footnoted since it is recorded on the financial statements.
f. Dec 27 transaction will be reported as a liability on the balance sheet and a loss on the income statement. Transaction will also be footnoted.
g. Dec 31 transaction will be reported as a liability on the balance sheet and an expense on the income statement. Transaction will not be footnoted since it is recorded on the financial statements.
h. Dec 5 transaction will be footnoted as a contingent liability.

The description of the treatment of each contingent liability, arising from the affected December transactions in the financial statements of Tripp are as follows:

1. Dec 5 transaction will be treated as h. footnoted

2. Dec 22 transaction will not be treated as b. not footnoted

3. Dec 27 transaction will be reported as e. liability and expense

4. Dec 31 transaction will be reported as g. liability and expense

Thus, contingent liabilities are disclosed if their amounts can be reasonably estimated and they are likely to occur. They are footnoted if the amounts cannot be reasonably estimated, though they are likely to occur.

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The transactions are in the attachment.