. Gingerbread Corp was under a pending lawsuit by a customer suing for having slipped on a puddle of water from a leaky pipe in March of 2020. The lawsuit is considered to be probable to favor the customer and can reasonably estimated for $5,000. What is the correct entry to be recorded on December 31, 2020? a.DR Legal receivable 5,000 CR Legal expense 5,000 b.DR Legal expense 5,000 CR Cash 5,000 c.The lawsuit has not been resolved and therefor would not appear on the company financial statements d.DR Legal expense 5,000 CR Legal liability 5,000
. Gingerbread Corp was under a pending lawsuit by a customer suing for having slipped on a puddle of water from a leaky pipe in March of 2020. The lawsuit is considered to be probable to favor the customer and can reasonably estimated for $5,000. What is the correct entry to be recorded on December 31, 2020? a.DR Legal receivable 5,000 CR Legal expense 5,000 b.DR Legal expense 5,000 CR Cash 5,000 c.The lawsuit has not been resolved and therefor would not appear on the company financial statements d.DR Legal expense 5,000 CR Legal liability 5,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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13. Gingerbread Corp was under a pending lawsuit by a customer suing for having slipped on a puddle of water from a leaky pipe in March of 2020. The lawsuit is considered to be probable to favor the customer and can reasonably estimated for $5,000. What is the correct entry to be recorded on December 31, 2020?
a.DR Legal receivable 5,000 CR Legal expense 5,000
b.DR Legal expense 5,000 CR Cash 5,000
c.The lawsuit has not been resolved and therefor would not appear on the company financial statements
d.DR Legal expense 5,000 CR Legal liability 5,000
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