As noted, most companies can't escape legal matters. In this case, MAK, Inc. is in some legal trouble. They have been sued for patent infringement by CMN, Inc. If they lose, MAK Inc. could end up paying $6,000,000 when it settles. It is highly probable MAK will lose. Record the appropriate journal entry, if required, for MAK prior to any actual award of damages. Record the journal entry if the case settled for $4,000,000