Determine which of the following transactions represent contingent liabilities for June Leasing and indicate the proper accounting treatment at the company's fiscal year-end, by placing the letter of the correct accounting treatment in the space provided.

a. Accrue a liability and disclose in the financial statement notes

b. Disclose in the financial statement footnotes only

c. No disclosure

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1. June Leasing was sued by a customer who claimed the equipment they leased was not up to the standards described by June. June stands by its claims and can support all the item's specifications. June plans to vigorously defend itself and believes the chances of losing the lawsuit are remote. 2. A government audit of June found that the company is in violation of several work safety regulations. June has been notified that it will be assessed a fine of $25,000. June has agreed to make the safety changes so that it will be in compliance with the regulations. 3. June Leasing has been served a lawsuit by a customer that claims he was injured from one of the products leased from June. June plans to defend itself in court, but its lawyers believe there is a 50/50 chance that they will lose and be forced to pay $50,000.