Saltwater Imports (SI) raised the capital for acquiring the facilities. The company leased ten boats in

Southeast Asia, 20,000 square feet warehouse with a holding tank for the crocodiles in the State of

Gould, and a 2500 square feet office in the State of Gould. Both the warehouse and the office were

leased from Andrew Property Management (APM) for three years, beginning January 1, 2008.

At the end of the first year, Because of the Sl's apparent success, they wanted to expand its facilities.

On January 2, 2009, Saltwater Imports notified Andrew Property Management that he no longer

needed in their current warehouse and office space. They would be vacating the properties by January

30th in order to move into larger facilities. Andrew Property Management is claiming that Saltwater

Imports company had no right to break the lease. Saltwater Imports is being sued for an amount equal

to the balance of the lease term and for punitive damage.

Andrew is prepared to sue Saltwater Imports Enterprise for $258,000 [This amount includes $108,000

in lost rent and $150,000 in punitive damages]. The claim is itemized below:

Warehouse:

Monthly rent $3,000

Balance of the lease 24 months

Total rent for warehouse 72,000

Office space:

Monthly rent 1,500

Balance of the Lease 24 months

Total rent for warehouse 36,000

TOTAL RENT 108,000

PUNITIVE DAMAGES 150,000

I

TOTAL RENT AND PUNITIVE DAMAGES 258,000

Show the journal entry to record the legal liability arising from the potential lawsuit. (If you find there

is no liability, show the entry needed if there was liability)