Chapter 11, Problem 13E

To determine

Contingent Liability:

A potential liability which is concerned with occurrence or outcome of a future event is called contingent liability. Since the outcome of a particular future event is uncertain, the amount of liability cannot be estimated and disclose on the balance sheet unless it is probable and its value can be reasonably estimated.

To determine:

Prepare adjusting entries on December 31, 2015 for the following transactions and events.