Please tell me what should I do in the following situation:

Today , one of our clients , Gunnar Messup ( the CEO of Platter Perfection ) , sent me the following e - mail :" * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Good morning , Nancy - I hope your new year is off to a good start . We are hopeful that 2019 will be a better year for us ! As you know , we have some issues back in 2018 . In* October 2018 , we had a major shipping problem for our ceramic platter line . One of our new shipping crew members packed the platters in actual peanuts rather than packing* peanuts . Several stores received the boxes of platters in peanuts and reported that receiving dock employees and customers experienced peanut allergy symptoms and had to receive medical treatment . I' wo customers sued us in November for a total of $250, 000. Keep in mind that our year end is December 31 , 2018 . We hope to issue our 2018 financials by April 1 ST. Our attorneys think we will probably lose the suit and have to pay damages of $ 200, 000 in March 2019 . Since we don't expect to have to pay until March , we are not going to record anything in our 2018 financial statements . I hope your intern can determine if my proposed treatment of this issue is in accordance with GAAP. Please include a reference to the GAAP rules for accounting for loss contingencies like this . If you are recommending some other approach or entry , please let me know . Thanks . Oh wait - I just got a call from our attorneys today . They asked us to issue a check today ( 2 / 18 / 19 ) for $ 225 , 000 - and that will settle the whole thing . Thank goodness that's resolved . I know that you will be here conducting your audit field work for the next weeks . We can discuss this issue if you have questions . * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *` Please prepare a memo that recaps the problem , explains how Gunnar should account for the platter problem under GAAP and proposes any required journal entry . Address your memo directly to Mr. Messup since I plan to forward it to him on Monday , February 25 th . Thanks for your help