In January 2015, a customer filed a lawsuit against Fireen's Boutique. The customer fell on an icy patch in the store's parking lot and broke an ankle in December. Fireen's fiscal year-end is January 31. The company's attorneys believe that it is reasonably possible that Fireen's will lose this case, with a 60% probability. The attorneys estimate that the loss will range between $400,000 and $500,000, which is material to Fireen's Requirements a. Explain how the lawsuit should be reported. b. Prepare any journal entries required. Requirement a. Explain how the lawsuit should be reported. O A. After we determine that a contingency exists, we assess the likelihood of incurring a loss. Because the loss is reasonably possible., Fireen does not record a loss nor report a liability. Because a loss is reasonably possible and the amount can be reasonably estimated, Fireen discloses the contingency. O B. The lawsuit is not a contingency; therefore, Fireen will not accrue or disclose a loss. C. The pending lawsuit represents a gain contingency Because the gain is likely to occur and the amount can be reasonably estimated, Fireen records a gain and increases an asset account. OD. The pending lawsuit represents a loss contingency Because the loss is likely to occur and the amount can be reasonably estimated Fireen records a loss and accrues a liability. Requirement b. Prepare any journal entries required. (Record debits first, then credits. Exclude explanations from journal entries. If no entry is required, select "No entry required" on the first account line and leave the remaining cells blank.) Account Current Year