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Sandym43678
September 26, 2022
Solved

Record lawsuit settlement that has to be paid

  • September 26, 2022
  • 3 replies
  • 0 views

We have to pay one of our customers $5,000 in a lawsuit settlement that we lost.  How do I record this transaction?  

Best answer by Rainflurry

@Sandym43678 

 

Record it as a Legal Fees expense when paid.  Set up a Legal Fees expense account if you don't have one. 

3 replies

Rainflurry
RainflurryAnswer
September 26, 2022

@Sandym43678 

 

Record it as a Legal Fees expense when paid.  Set up a Legal Fees expense account if you don't have one. 

S
Sandym43678Author
September 27, 2022

Thank you for your response!  I appreciate it.

Y
YW4
January 16, 2023

What if the payment is to the individual that sued you. I have the payment to the attorney under legal but which account should I use for payment to the individual?

 

I am in the middle of 1099'ing and realized it shouldn't be under legal for their 1099.

 

Thanks!

 

J
Jojo35
January 19, 2024

Account Type: Other Expense

Detail Type: Penalties & Settlements

Name it as 'Legal Settlement'

T
Tati58
February 22, 2024

So do I need to post the attorney's settlement to 'Professional Fees - Legal Fees'? and the ex employee payments to Other Expense under Settlement?  Do I need to record a JE to the Balance sheet to record these payments as it will be for a total of one year we will be making payments to the ex employee and his attorney.

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