Question

Titan Company is being sued for $200,000 and the attorney advises Titan that they will probably lose the lawsuit and is estimated Jones will pay the full amount of $200,000. Titan Company would need to record ________.

Answer 1

Answer: a credit to a liability

Step-by-step explanation:

Credit to liability is recorded when a firm knows that it will loose in its case and it has to pay compensation for the law suit. The payment for the law suit is a liability to the firm.

Titan company's attorney has mentioned that the company would probably lose in the law suit and would have to pay an amount of $200,000. This amount will recorded as the credit to liability in the books of Titan Company.