Computer Wholesalers restores and resells notebook computers. It originally acquires the notebook computers from corporations upgrading their computer systems, and it backs each notebook it sells with a $90-$day warranty against defects. Based on previous experience, Computer Wholesalers expects warranty costs to be approximately $4\%$ of sales. Sales for the month of December are $$460,000.$ Actual warranty expenditures in January of the following year were $$16,000.$

Required:

$1.$ Does this situation represent a contingent liability?

$2.$ & $3.$ Record the necessary entries in the Journal Entry Worksheet below.

$4.$ What is the balance in the Warranty Liability account after the entries in Parts $2$ and $3?$