The following unrelated events occurred after the balance sheet date but before the audit report was prepared. In each of the highly material independent events, state the appropriate action and justify your response. The alternative actions are as follows: a. Adjust the June 30, 2011, financial statements b. Disclose the information in a footnote in the June 30, 2011 financial statements c. No action is required The events are as follows: 1. On July 30, 2011 the auditor discovered that a debtor of D Corporation went to bankrupt on July 15, 2011. The sales had taken place January 15, 2011 2. On July 20, 2011 D Corporation settled a lawsuit out of court for $150,000. The lawsuit was originated in 2008 and it was disclosed as a contingent liability in the notes to the financial statements 3. On July 15, 2011 a lawsuit was filed against D Corporation for a patent infringement action allegedly took place in early 2011. In the opinion of legal counsel, there is a danger of a significant loss to the client 4. Granting of retroactive pay increase 5. Sale of a fixed asset at a substantial profit 6. Determination by the federal government of additional income tax due for a prior year