$$ Question $7($Mandatory$)(3\mathrm{.}57$ points$)$ Retake question

In May of $2024,$ Raymond Financial Services became involved in a penalty dispute with the EPA. At December $31,2024,$ the environmental attorney for Raymond indicated that an unfavorable outcome to the dispute was probable. The additional penalties were estimated to be $$765,000$ but could be as high as $$1,160,000.$ After the year$-$end, but before the $2024$ financial statements were issued, Raymond accepted an EPA settlement offer of $$890,000.$ Raymond should have reported an accrued liability on its December $31,2024,$ balance sheet of:

$$ $$1,160,000.$

$$890,000.$

$$765,000.$

$$270,000$