Question

Pacific Cruise Lines is a defendant in litigation involving a swimming accident on one of its three cruise ships. Required: 1. The likelihood of a payment occurring is probable, and the estimated amount is $1.25 million. 2. The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $1.05 to $1.25 million. 3. The likelihood of a payment occurring is reasonably possible, and the estimated amount is $1.25 million. 4. The likelihood of a payment occurring is remote, while the estimated potential amount is $1.25 million. Record the necessary entry for the scenarios given above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in dollars, not in millions. (i.e. 5.5 should be entered as 5,500,000).)

Answer 1

1..

31-Dec

Dr Loss $1.25 million

Cr Contingent Liability 1.25 million

2.

31-Dec

Dr Loss $1.05 million

Cr Contingent Liability 1.05 million

3. No disclosure is required

4. No disclosure is required

Step-by-step explanation:

Pacific Cruise Lines Journa entries

1.

31-Dec

Dr Loss $1.25 million

Cr Contingent Liability 1.25 million

2.

31-Dec

Dr Loss $1.05 million

Cr Contingent Liability 1.05 million

3. No disclosure is required

4. No disclosure is required