In May of 2027, Raymond Financial Services became involved i…

In Mаy оf 2027, Rаymоnd Finаncial Services became invоlved in a penalty dispute with the EPA. At December 31, 2027, the environmental attorney for Raymond indicated that an unfavorable outcome to the dispute was probable. The additional penalties were estimated to be $770,000 but could be as high as $1,170,000. After the year-end, but before the 2027 financial statements were issued, Raymond accepted an EPA settlement offer of $900,000. Raymond should have reported an accrued expense on its December 31, 2027, balance sheet of: