Several months ago, Cinnabar Chemical Company experienced a harardos materials spill at one of its plants, As a result, the Environmental Protection Agency (EPA) fined the company $1,416,000. The company is contesting the fine. In addition, an employee is seeking $328,000 damages related to inguries sustained while cleaning up the spill, Lastly, a homeowner has sued the company for $292,000, The homeowner lives 15 miles from the plant but believes that the incident has reduced the home's resale value by $292,000 Cinnabar's legal counsei believes that it is probable that the EPA fine will stand. In addition, counsel indicates that an out-of-court settiement of s164, o0o has recentiy been reached with the employce. The final papers will be signed next week, Counsel believes that the homeowner's case is much weaker and will be decided in favor of Cinnabar Other litigation related to the spili is possible, but the damage amounts are uncertain. a. Hllustrate the effects of the contingent liabilities associated with the hazardous materials spill on the accounts and financial staternents. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. b. If other litigation related to the spill is possible, but the damage amounts are uncertain, which of the following is the best course for Cinnabar to follow in its reporting? 3 more Coeck My Work ises fomaining