Question

Oriole Shoes Foot Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is a 40% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be $803000. What is the required journal entry as a result of this litigation

Answer 1

Answer:

No journal entries required

Explanation:

According to attorney estimation, the chances of winning the case are certain therefore no journal entry is required for adjustments since the chances of losing the case are very uncertain.