A company is a defendant in litigation involving a swimming accident on one of its three cruise ships. Required: The likelihood of a payment occurring is probable, and the estimated amount is $1.14 million. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $0.94 to $1.14 million. The likelihood of a payment occurring is reasonably possible, and the estimated amount is $1.14 million. The likelihood of a payment occurring is remote, while the estimated potential amount is $1.14 million. Record the necessary entry for the scenarios given above. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $5.5 million should be entered as 5,500,000.)

Question

Gisselle Garrison

Business

2 May, 15:31

A company is a defendant in litigation involving a swimming accident on one of its three cruise ships. Required: The likelihood of a payment occurring is probable, and the estimated amount is $1.14 million. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $0.94 to $1.14 million. The likelihood of a payment occurring is reasonably possible, and the estimated amount is $1.14 million. The likelihood of a payment occurring is remote, while the estimated potential amount is $1.14 million. Record the necessary entry for the scenarios given above. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $5.5 million should be entered as 5,500,000.)

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Answers (1)

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Mayra Little · Answer 1

Journal entries

Explanation:

The journal entries are shown below:

a. Loss $1,140,000

To Contingent liability $1,140,000

(Being the contingent liability is recorded)

b. Loss $940,000

To Contingent liability $940,000

(Being the contingent liability is recorded)

c. No journal entry is required

d. No journal entry is required

Therefore, only first two journal entries are required