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Sheridan Company is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents

Sheridan Company is being sued for illness caused to local residents as a result of negligence on the company's part in permitting the local residents to be exposed to highly toxic chemicals from its plant. Sheridan's lawyer states that it is probable that Sheridan will lose the suit and be found liable for a judgment costing Sheridan anywhere from $1800000 to $9040000. However, the lawyer states that the most probable cost is $5410000. As a result of the above facts, Sheridan should accrue

no loss contingency but disclose a contingency of $1800000 to $9040000.

a loss contingency of $5410000 and disclose an additional contingency of up to $3630000.

a loss contingency of $5410000 but not disclose any additional contingency.

a loss contingency of $1800000 and disclose an additional contingency of up to $7240000.

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