Arrow Industries was sued for infringing Masco Industries' patent No. 675X in August of 2020. Arrow's lawyers believed it was probable it was going to lose and estimated damages were $2,000,000 to $5,000,000. They also believed the low end of the range was more likely-than-not. Arrow's year-end is December 31. On April 30, 2021, after Arrow's 2020 financial statements were issued, the plaintiff accepted a cash settlement of $2,500,000. Arrow Industries paid the liability next day. 1 Show, in good form, the journal entry made to record the settlement. (25 points) RAR Corporation issued $500,000, 7%, 10-year bonds on January 1, 2011 when the market rate was 9%. Bond issuance costs were $30,000. The bonds are callable at 103. The entire issuance was redeemed on January 1, 2015. Their carrying amount was $430,500 at the redemption date. 2. Record, in good form, the journal entry to redeem the bonds. (25 points) ************* ***************************************** ABC Investors began investing in 2019. At December 31, 2019, its investment portfolio was account: Investments - Trading Securities Cost Fair Value Unrealized Gain (Loss) Hilton Common Stock $40,000 $32,000 $(8,000) Marriott Common Stock $30,000 $32,000 $2,000 Doubletree Common Stock $20,000 $18,000 $(2,000) Total portfolio $90,000 $82,000 $(8000) The Marriott Common Stock was sold for $34,800 on May 3, 2020. The fair values of the securities remaining in the Investments - Trading Securities account at December 31, 2020 were: Hilton $41,500 Doubletree $22,000 3. Show the complete history of the Securities Fair Value Adj. Account in good form. (25 Points). ***** Zemi Appliances, a publicly traded company, had the following activity during 2020: (1) Revenues were $6,250,250 and expenses were $5,968,211. (ii) The Company's common stock was affected by the following activity: a. On January 1, common shares: 200,000 b. On April 30, purchased shares: 50,000 d. On October 31, issued shares of common stock 10,000 (iii) There were 20,000 call options at December 31, 2020. The options are exercisable at $30 and Zemi Appliances' average share price during the year was $40. (iv) Zemi Appliances has no preferred stock. 4. Compute Zemi Appliances' Diluted Earnings-Per-Share for 2020. (25 points)