Question
JONES Company has a financial year-end of 31 December 2019. The accounts are signed off by the directors (after the external audit is complete) on
JONES Company has a financial year-end of 31 December 2019.
The accounts are signed off by the directors (after the external audit is complete) on 31 March 2020.
On 15 March 2020, the company is sued by shareholders for issuing a misleading message (via JONES Company's twitter account) on 10 March 2020. JONES COMPANY estimates that this lawsuit will lead to a loss on settlement of $200,000.
WIth respect to the 2019 Financial Statements, the lawsuit of 15 March 2020 should be classified as:
Select one:
a. An adjusting event requiring a Credit to Lawsuit Expense of $200,000
b. None of these answers
c. An adjusting event requiring a Credit to Lawsuit Liability of $200,000
d. An adjusting event requiring a Debit to Lawsuit Expense of $200,000
e. A non-adjusting event
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started