Reference no: EM131704055

Question: (Adjusting for claims in government-wide financial statements) Punkeytown carries no insurance for possible claims and, as of January 1, 2013 (the start of its fiscal year), Punkeytown had no outstanding claims. During 2013 a town water main burst, flooding the basements of two property owners. The property owners sued the town for damages. The town settled one claim in December 2013 for $4,000 and expected to pay it in early January 2014. The town's counsel thought he could settle the second claim for about $11,000, but he expected negotiations to drag on for 18 months before reaching agreement. Based on this information, prepare the journal entry (if needed) to adjust Punkey = town's 2013 fund financial statements so government wide statements can be prepared.