- Step 1: House 1 = Red, House 3 = Cat.
- Step 2: Dog not in House 4, so Dog in House 1, 2, or 3.
- Step 3: House 3 has Cat, so Dog in House 1 or 2.
- Step 4: Assign remaining pets: Bird, Fish to Houses 2, 4 (House 1 has Red, not pet-specific).
- Step 5: Test: If Dog in House 2, then House 4 = Bird or Fish, House 1 = Fish or Bird. Possible.
- Step 6: Option (2) is correct (logical fit).