1. You are auditing a manufacturing companys financial statements for the year ended December 31, 2020. The client believes the union its hourly workers belong to may call a strike during early 2021. The Company would incur material losses from the disruption caused by such a strike. This situation should result in:

a)	An adjusting entry as of December 31, 2020.

b)	Footnote disclosure in the financial statements for the year ended December 31, 2020.

c)	An adjusting entry as of December 31, 2020 and footnote disclosure in the financial statements for the year ended December 31, 2020.

d)	Neither an adjusting entry as of December 31, 2020 nor footnote disclosure in the financial statements for the year ended December 31, 2020.

2. Your CPA firm is auditing Smith Company for the year end December 31, 2020. The anticipated audit report date is February 28, 2021. Your firm receives a legal response from outside legal counsel dated February 25, 2021 which states: Steve Green vs. Smith Company: This matter commenced on September 1, 2020. The plaintiff alleges discrimination relating to his termination on April 15, 2020. This case is tentatively settled with Smith Company paying Green $75,000. The amount of $75,000 is material to the Smith Company financial statements. This matter should result in:

a)	An adjusting entry as of December 31, 2020.

b)	Footnote disclosure in the financial statements for the year ended December 31, 2020.

c)	An adjusting entry as of December 31, 2020 and footnote disclosure in the financial statements for the year ended December 31, 2020.

d)	Neither an adjusting entry as of December 31, 2020 nor footnote disclosure in the financial statements for the year ended December 31, 2020.