Exercise $8-14($Algo$)$ Determine proper treatment of a contingent liability $($LO$8-5)$

Mississippi Cruise Lines is a defendant in litigation involving a swimming accident on one of its three cruise ships.

Required:

The likelihood of a payment occurring is probable, and the estimated amount is $$1\mathrm{.}10$ million.

The likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $$0\mathrm{.}90$ to $$1\mathrm{.}10$ million.

The likelihood of a payment occurring is reasonably possible, and the estimated amount is $$1\mathrm{.}10$ million.

The likelihood of a payment occurring is remote, while the estimated potential amount is $$1\mathrm{.}10$ million.

Record the necessary entry for the scenarios given above. $($If no entry is required for a particular transaction$/$event$,$ select $"$No

Journal Entry Required" in the first account field. Enter your answers in dollars, not in millions. For example, $$5\mathrm{.}5$ million should

be entered as $5,500,000.)$

Journal entry worksheet

$1.$ Record the contingent liability, if necessary, if the likelihood of a payment

$2.$ Record the contingent liability, if necessary, if the likelihood of a payment occurring is probable, and the amount is estimated to be in the range of $$0\mathrm{.}90$ to $$1\mathrm{.}10$ million.

$3.$ Record the contingent liability, if necessary, if the likelihood of a payment occurring is reasonably possible, and the estimated amount is $$1\mathrm{.}10$ million.

$4.$ Record the contingent liability, if necessary, if the likelihood of a payment occurring is remote, while the estimated potential amount is $$1\mathrm{.}10$ million.

occurring is probable, and the estimated amount is $$1\mathrm{.}10$ million.

Note: Enter debits before credits.