For each separate situation, indicate whether Cruz Company should

(a) Record a liability,

(b) Disclose in notes,

(c) Have no disclosure.

1. Cruz Company guarantees the $100,000 debt of a supplier. It is not probable that the supplier will default on the debt.

2. A disgruntled employee is suing Cruz Company. Legal advisers believe that the company will likely need to pay damages, but the amount cannot be reasonably estimated.