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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 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 Punkeytown 2013 fund financial statements so government wide statements can be prepared.
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