Cupola Awning Corporation introduced a new line of commercial awnings in $2024$ that carry a two$-$year warranty against manufacturer$$s defects. Based on their experience with previous product introductions, warranty costs are expected to approximate $3\%$ of sales. Sales and actual warranty expenditures for the first year of selling the product were:

Sales Actual Warranty Expenditures

$ $5,780,000$ $ $38,500$

Required:

Does this situation represent a loss contingency?

Prepare journal entries that summarize sales of the awnings $($assume all credit sales$)$ and any aspects of the warranty that should be recorded during $2024.$

What amount should Cupola report as a liability at December $31,2024?$