Question: A citizen sued a city because he was accidentally shot
A citizen sued a city because he was accidentally shot by a police officer. The city acknowledges responsibility for the accident, and based on ongoing negotiations, the city’s attorney believes the citizen’s claim will probably be settled for about $ 75,000. The accident occurred on March 14, 2013; the government’s fiscal year ends June 30, 2013; and the city’s attorney believes settlement will be reached in about January 2014. Prepare the journal entry, if any, the city should make regarding this event when it closes its General Fund books for fiscal year 2013. To support your answer, state the principle that governs the accounting for this event in the General Fund.
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