Cindy Smith, CPA, is auditing the financial statements of Purple Company for the year ended December 31, 2020. Cindy plans to complete her audit work on February 28, 2021 and issue her audit report by March 15, 2021. On February 5, 2021, Purple Company settled and paid a personal injury claim of a former employee as the result of an accident that occurred in January, 2020. (This settlement is material.) Purple Company has not previously recorded a liability for the claim. This subsequent event should result in:

a)	An adjusting entry as of December 31, 2020.

b)	Footnote disclosure in the financial statements for the year ended December 31, 2020.

c)	An adjusting entry as of December 31, 2020 and footnote disclosure in the financial statements for the year ended December 31, 2020.

d)	Neither an adjusting entry as of December 31, 2020 nor footnote disclosure in the financial statements for the year ended December 31, 2020.