B.Jackson Inc. is being sued by its leather supplier for breach of contract. Jacksons lawyers can not

decide how to classify the likelihood of a loss, but are able to estimate it at 376,000- 650,000.

Jackson asks you what it should do if the loss is classified as probable, reasonably possible,

remote or could result in again.

1.Explain to Jackson what it should do under those four potential outcomes. ( 4 points)

2.Would you recommend that Jackson have reserves set aside for any of these contingencies ( 4points)

A. Jackson Inc. sells leather goods to the general public. It would like to expand and wants to borrow Jackson needs $10Million to complete the expansion. The entity has been offered a loan for $10M from the Florida National Bank or it can issue bonds to the general public Financial details for both scenarios are listed below (9 points) Notes payable Amount loaned Note issue date Note maturity date Interest rate $10M 11% Bonds payable 10M 9% 8% FACE STATED RATE MARKET RATE BOND ISSUE DATE Bond maturity date 5/1/28