EX Qu. 163 Rotary Tools sells power tools... Rotary Tools sells power tools and backs each product it sells with a one-year warranty against defects. Based on previous experience, the company expects warranty costs to be approximately 5% of sales. By he end of he first year, sales are $800,000 1.Does this situation represent a contingent liability? O Yes Actua warranty expenses incurred so r are 300. O No 2. Record warranty expense and warranty liability for the year based on 5% of sales. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record warranty expense and warranty liability for the year based on 5% of sales. Note: Enter debits before credits. Event General Journal Debit Credit