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Cheyenne Company recently was sued by a competitor for patent infringement. Attorneys have determined that it is probable that Cheyenne will lose the case and
Cheyenne Company recently was sued by a competitor for patent infringement. Attorneys have determined that it is probable that Cheyenne will lose the case and that a reasonable estimate of damages to be paid by Cheyenne is $322,900. In light of this case, Cheyenne is considering establishing a $97,000 self-insurance allowance. What entry, if any, should Cheyenne record to recognize this loss contingency? (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries.)
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