Marin Inc. is involved in a lawsuit at December 31, 2017. Prepare the December 3

Question

Marin Inc. is involved in a lawsuit at December 31, 2017.

Prepare the December 31 entry assuming it is probable that Marin will be liable for $894,400 as a result of this suit. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Prepare the December 31 entry, if any, assuming it is not probable that Marin will be liable for any payment as a result of this suit. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date

Account Titles and Explanation

Debit

Credit

Date

Account Titles and Explanation

Debit

Credit

December 31, 2017

Explanation / Answer

Solution 1:

Solution 2:

No entry is necessary. The loss is not accrued because it is not probable that a liability has been incurred.

Journal Entries - Marin Inc. Date Particulars Debit Credit 31-Dec Lawsuit Loss Dr $894,400.00                  To Lawsuit Liability $894,400.00

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