Cola Corporation issued its financial statements for the year ended December 31, 2020, on February 25, 2021. The following events took place early in 2021.

Instructions: Discuss how the preceding post-balance-sheet events should be reflected in the 2020financialstatements.

a. On January 29, the company purchased 50,000 shares of its $1 par value common stock for $23 per share.

b. On February 15, Cola determined after negotiations with the other party in a lawsuit that Cola should pay $500,000. At December 31, 2020, a litigation liability was recorded at $200,00