Contingent liabulities Several months ogo, Ayers Industries Inci, experienced a hazardous materials spill at one of its plants, As a result, the Environmental Protection Agency (EPA) fined the company $240,000. The company is contesting the fine. In addition, an emplayee is seeking $220,000 in damages reloted to the spill Lastly, a homeowner has. sued the company for $310,000. The homeowner lives 35 miles from the plant but believes that the incident has reduced the home's resale value by $310,000. Ayers' legal counsel believes that is is probable that the EPA fine will stand. In addition, counsel indicates that an out-af-court settlement of $125,000 has recenthy been reached with the employee. The final papers will be signed next week. Counsel believes that the homeowner's case is much weaker and will be docided in favor of Ayers. Other litigation releted to the spill is possible, but the darnage amounts are uncertain. a. Joumalize the contingent liablities associated with the hazardous materials spill. Use the account "Damage Awards and Fines" to recognize the expense for the period. If an amount box does not require an entry, leave it blank. Femeack Theag UrV Won This is an accrued expenso acfushing erry company is a party. The Environmental Protection Agency (EPA) has fined the cornpany $ , which the company is contesting in court. Although the company admit fault, legal counsel beleves that the fine parment is . In addition, an employee has sued the company A 5 out-ol-court settlemen has been reached with the employee. The EPA fine and out-of-court settlement have been recognired as for the period. There is one other outstanding lansut related to this incident. Counsel believe that the lavsu; has merit Other lawsuls and unknown liabilities mar arise from this incident