problem 16-37 - any help would be appreciated.

The following situations represent excerpts from the responses to audit inquiries of external legal counsel of XYZ Co. during the annual audit of year 1 ("legal response"). For each excerpt, select the most appropriate financial statement effect and audit respose. Each excerpt is independent. Responses may be used once, more than once, or not at all. The client's year end is December 31, year 1. The anticipated audit report date is February 15, year 2. All amounts are material to the financial statments